EU settles with U.S. and Canada on grain imports

by Emily Wilson
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BRUSSELS, BELGIUM — The European Commission has reached agreement with Canada and the United States on a new regime for E.U. imports of medium- and low-quality wheat and barley following negotiations under World Trade Organization rules. The agreement is subject to approval of the E.U. member states.

Starting Jan. 1, the E.U. will impose a tariff rate quota of 2,981,600 tonnes for medium- and low-quality wheat. Under the agreement, Canada will receive a country allocation of 38,000 tonnes, while the U.S. receives a country allocation of 572,000 tonnes. The remainder of the quota — 2,371,600 tonnes — will be open to other importers.

The wheat duty will be e12 per tonne in the quota. Outside the quota, the duty will be unchanged at €95 per tonne.

For barley, one quota of 50,000 tonnes will be open for malting barley, with a duty of €8 per tonne, and another quota of 300,000 tonnes, with a duty of e16 will be open for other barley. Outside the quotas, the current duty of €93 will remain unchanged. Both barley quotas also will start on Jan. 1.

The Commission will now consult with Russia and Ukraine, who are cereal exporters to the E.U. but not yet members of the WTO.

"I am glad that we now have reached agreement with Canada (and the U.S.)," said Franz Fischler, E.U. Commissioner for Agriculture, Rural Development and Fisheries. "The new system will help stabilize the E.U. cereal market whilst keeping our markets open to imports of all cereals and especially of high quality cereals from all countries. This deal also accommodates recent exporters interests, as it provides Russia and Ukraine with reasonable export opportunities that go even beyond their average exports in recent years."

Canada exported 870,000 tonnes of milling wheat and 378,000 tonnes of durum to the E.U. in 2001. Canadian exports are not expected to be affected by the modifications.

Article XXVIII of the GATT allows WTO members to modify concessions and specifies the rules to calculate the amount of compensation that a WTO member should provide when an unlimited tariff concession is replaced by a quota.

The current system to calculate E.U. import duties for cereals will remain in place for cereals other than barley and medium- and low-quality wheat. That system is based on U.S. commodity exchange quotes, plus commercial premiums and transportation costs, as representative of world cereal market prices.

These market prices are then converted into theoretical CIF-Rotterdam prices, which are compared to 155% of the E.U. intervention price. The difference between these two values is the import duty periodically set by the E.U. Commission.

E.U. officials devised the new TRQs for lower-quality wheat and barley in response to complaints from E.U. farmers, who said the current price differential system had encouraged a flood of feed wheat and barley imports from the Black Sea region at prices well below the world market.