What are the positions of the EU Food and Drink Industry leading up to the 4th WTO Ministerial Conference?

CIAA welcomes the launch of a new round of WTO negotiations in order to increase trade opportunities and facilitate market access for processed EU food products as new global markets open up. It should be based on a broad agenda of issues to be addressed with a view to conclude a "single undertaking".

No specific advance commitments should be made at this point of negotiations, in order not to pre-judge a comprehensive agreement in agriculture. The CIAA supports the approach described in Article 20 of the Agricultural Agreement, according to which "long-term objectives of substantial progressive reduction in support and protection resulting in fundamental reform should be part of an ongoing process". Commitments, such as the elimination of export refunds, would pre-judge the outcome of negotiations, ignore the need for a coherent reform in agriculture policy and ultimately, since refunds compensate for higher internal agricultural prices, this would put the competitiveness of the EU food and drink sector at risk.

The CIAA is in a favour of setting a clear calendar for negotiations in order to establish, as soon as possible, sufficient stability and predictability. During this period of negotiation the "peace clause" should apply in order to prevent trade disputes on elements under negotiation.

CIAA stands for the Confederation of the Food and Drink Industries in the EU and represents the largest manufacturing industry in Europe
14 % of EU industrial production - 570 billion Euro production value
2.6 million employees - 26.000 companies
The use of more than 70% of EU output of agricultural raw materialsand use of large quantities of third country agricultural products
37 billion Euro EU exports of food and drink industry products
The EU imports agricultural and processed foodstuffs for a value of 57 billion Euro

What is the CIAA approach in agriculture negotiations in details ?

CIAA is to a large extent in line with the approach taken by the Commission as regards the WTO negotiations on agriculture.

A clear and coherent approach is needed

Such an approach should include both:

the need for treating basic agricultural products and processed goods equivalently and
the recognition that the three fundamental areas of the WTO negotiations on agriculture - market access, internal support and export competition - are inextricably linked and need to be dealt with in a coherent way.

Export competition

CIAA is aware of the pressure that other trade partners put on the EU on its so-called export subsidies but is opposed to any cut in export refunds that does not go hand in hand with falls in internal EU raw material prices. This would only succeed in closing off export markets and forcing European companies to relocate outside the EU. For the processing sector using Community raw materials, any fall in the price of basic products paid by processors due to the reform of the Common Agricultural Policy will allow for appropriate cuts in export refunds.

In addition, no concessions on export competition should be made if other instruments to support exports, such as export credits, are not adequately addressed. CIAA believes that there is a need for finding a fairer level playing field. Officially supported export credits in agriculture, should be covered by specific WTO rules and disciplines. This could be done by integrating into the Agreement on Agriculture the rules and disciplines agreed upon, or under discussion in other international fora such as the OECD.

The " peace clause " should also apply during the implementation period of the new commitments in agriculture, as long as reform is ongoing.

Market access

The EU should push for improvements in market access for both agricultural raw material and processed food products; EU proposals for improved access onto its markets must be met by at least equivalent efforts from other trading partners.

The EU also needs to make sure that its proposed Community tariff reductions correspond to internal raw material price cuts. A detailed sector by sector analysis of commitments will be necessary to safeguard this balance.

Individual sectors will aim for more ambitious market improvements while others will have more limited objectives.

CIAA agrees with the need for clarification and simplification in the management of tariff quotas.

Domestic support

CIAA supports EU efforts to properly address all agricultural policy measures which are trade distorting, including for example marketing loans.

Non-trade concerns

The different functions of the agricultural sector, such as preserving the landscape, protecting the environment and maintaining a socio-economic network should not lead to underrating the economic role of agricultural production. Other objectives, such as animal welfare, will require the establishment of appropriate criteria and standards by which they can be evaluated. If these important topics are not addressed adequately at international level, they could finally result in a competitive disadvantage for food producing sectors.

Geographical indications - Intellectual property

The EU should ensure in the framework of the TRIPs agreement an effective and continuous protection of the specific character of products using particular denominations (geographical indications and denomination of origin). This would respond to the need to fight misuse of product names, to ensure fair competition and to protect the interest of consumers.

The SPS agreement

The SPS agreement, since its entry into force, has proven to be a necessary tool to guide WTO members in the definition and implementation of sanitary and phyto-sanitary measures. CIAA does not consider it necessary nor timely to review the provisions of the SPS agreement. The agreement has, to date, been used in a limited number of cases as a basis for resolving disputes within the DSS. For CIAA, the current application and the implementation of the SPS Agreement do not call for urgent amendment of its provisions.

Precaution

Article 5(7) of the SPS agreement allows members to take provisional precautionary measures in the case of insufficient scientific evidence on a food safety risk. This provision has given rise to concerns from certain WTO members because of its potential to create barriers to trade. CIAA acknowledges the risk of increasing use of trade protectionist actions, similar to those experienced by the EU food and drink industry exporting to third countries during the various food safety crises: BSE, foot and mouth and dioxin.

For CIAA, it is therefore important to emphasise that risk analysis must remain the rule. Precaution can only be an exceptional measure and its use must be subject to a number of pre-conditions. Precautionary measures must be exceptional, provisional, proportional, non-discriminatory and consistent; they must also assign the burden of proof to the responsible government and allow consultation of stakeholders. As Codex is developing Working Principles for risk analysis, CIAA considers that these principles should integrate guidelines on how to implement article 5.7 of the SPS agreement and hence how to use precaution in risk management.

October 2001