Commission and US conclude negotiations on new cereal import regime

IP/02/1656

Brussels, 12 November 2002

Commission and US conclude negotiations on new cereal import regime

The European Commission and the US 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 600t will be open, starting on 1 January 2003. The US will benefit from a country allocation of 572 000t. The duty will be 12 EUR/t in the quota. Outside the quota the duty will be kept unchanged at 95 EUR/t. For barley one quota of 50 000t will be open for malting barley, with a duty of 8 EUR/t, and another quota of 300 000t with a duty of 16 EUR/t will be open for other barley. Outside the quotas the current duty of 93?/t will be kept unchanged. Both quotas will start on 1 January 2003 as well. For all the other cereals, the current system to calculate EU import duties, which takes US Commodity Exchange quotations as representative for world cereal market prices, remains in place. The deal has still to be approved by the EU member states.

"I am very pleased with this agreement", said Franz Fischler, EU Commissioner for Agriculture, Rural Development and Fisheries. "It will enable us to correct the misfunctioning of the cereals import regime and restore the balance in our market", he added, "whilst keeping our markets open to imports of cereals, and especially of high quality products, from all supplier countries".

Background

The current system to calculate EU import duties for cereals takes US Commodity Exchange quotations as representative for world cereal market prices. These quotations, by the addition of both commercial premiums applied on the US market and transport costs, are then converted into theoretical CIF-Rotterdam prices, which are compared to 155% of the EU Intervention price. The difference between these two values is the import duty periodically set by the EU Commission. During the last year, new exporters have started to sell grain at prices well below other world market prices.