IP/02/1657

Brussels, 12 November 2002

Commission and Canada conclude negotiations on new cereal import regime

Following the successful conclusions of negotiations based on Article XXVIII of GATT, the European Commission and Canada have agreed on a new regime for imports of medium and low quality wheat and barley. For medium and low quality wheat a Tariff Rate Quota (TRQ) of 2 981 600 t will be opened, starting on 1 January 2003. Canada will benefit from a country allocation of 38 000 t, the US of a country allocation of 572 000 t and rest of the quota will be open to other importers. The duty will be 12 EUR/t in the quota. Outside the quota the duty will be kept unchanged at 95 EUR/t. The agreement is subject to approval of the EU Member States. For barley one quota of 50 000 t will be open for malting barley, with a duty of 8 EUR/t, and another quota of 300 000 t with a duty of 16 EUR/t will be open for other barley. Outside the quotas the current duty of 93 EUR/t will be kept unchanged. Both quotas will start on 1 January 2003 as well. The Commission will now consult with Russia and the Ukraine, who are cereal exporters to the EU but not yet members of the WTO. For all the other cereals, the current system to calculate EU import duties remains in place.

"I am glad that - after the US - we now have also reached agreement with Canada", said Franz Fischler, EU Commissioner for Agriculture, Rural Development and Fisheries. "The new system will help stabilise the EU cereal market", he added, "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."

Background

The EU had notified to the WTO its intention to modify its import regime for cereals on 26 July 2002, based on Article XXVIII of the GATT. Article XXVIII of the GATT enables WTO members to modify concessions contained in their schedules of commitments. The Understanding on Article XXVIII specifies the rules to follow 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 EU import duties for cereals, which will remain in place for cereals other than medium and low quality wheat and barley, is based on representative world market prices and the import duties will continue to be calculated on the basis of the difference between world prices and 155% of the EU intervention price.