3.2 SPECIFIC IMPORT POLICIES IN THE EUROPEAN UNION, JAPAN AND THE UNITED STATES

3.2.1 European Union

A common market for fruit and vegetables has been a feature of the EU Common Agricultural Policy for several decades. For the importer of horticultural products, the key elements of EU policy which are of importance include common marketing standards for a wide range of products; seasonal import tariffs; entry prices for key products, the provision for "special safeguards" and sanitary and phytosanitary (SPS) measures.

Common marketing standards

Marketing standards are in operation for a wide range of fresh horticultural produce. The standards apply at all stages of distribution, and include imports and exports. They apply to over 40 products in the fruit, vegetables, salads, non edibles (cut flowers, foliage, flowering bulbs) and nuts categories. The standards apply to products produced within the EU, so tropical fruits and exotic^[20] vegetables, for example, are excluded.

Produce exported from a non EU origin must meet the standards applied to domestic produce, in respect of quality, packaging and labelling. Products that meet the required marketing standards are issued with a conformity certificate; those failing to meet the standards are refused entry. Some countries are able to carry out their own conformity checks. Only two of these, Morocco and South Africa, are non European.^[21]

Import tariffs, entry prices and special safeguard measures

The EU's highly complex import tariff regime aims to protect domestic production of fruit and vegetables during the growing season. For this reason, the regime's key features are as follows: (i) relatively low tariffs on imports of tropical fruit, for example 5.8 percent on pineapples and 0 percent on papayas and mangoes; (ii) differentiated tariffs for temperate and semi-tropical fruits, so that tariffs are higher during the season for European producers and lower out-of-season; and (iii) generally higher overall tariffs for vegetables, with no seasonal differentiation (Tables 3.1 and 3.2).

Table 3.1: Current MFN import tariffs for selected non-traditional agricultural exports - fruits - EC, US and Japan (percent)

Table 3.2: Current MFN import tariffs for selected non-traditional agricultural exports - vegetables - EC, US and Japan (percent)

Sources: EU Taxation and Customs Union TARIC database, Market Access Applied Tariff Database, Official Journal of the European Communities
1/ Entry prices apply. Specific duties vary depending on import price of the product, ad-valorem duties are constant
2/ Value for customs purposes

Seasonally differentiated tariffs also apply to imports of cut flowers (Table 3.3). The system is more straightforward than that for fruits and vegetables: an 8.5 percent tariff for seven months of the year and a 12.0 percent tariff for the remainder. Of the other speciality products listed in Table 3.3, medicinal herbs and ginger enjoy year-round duty-free status, whilst chillies and garlic face higher tariffs.

Table 3.3: Current MFN import tariffs for selected non-traditional agricultural exports - speciality products - EC, US and Japan (percent)

Sources: EU Taxation and Customs Union TARIC database, Market Access Applied Tariff Database, Official Journal of the European Communities

Under the URAA, a reference price system was replaced by a system of minimum import or entry prices which apply to a limited number of fruits and vegetables,^[22] but not to cut flowers or to other speciality products. The entry price system works in conjunction with the system of tariffs. The standard ad-valorem tariff is charged on imports with a c.i.f value above the entry price level. A specific duty is applied, in addition to the standard ad-valorem tariff, where the import price is below the entry price. This specific duty varies depending on the level of the import price. There is also a ceiling on this duty. In the case of tomatoes, for example, the maximum specific duty is €29.8/100 kg.

In most cases, the entry prices vary depending on the time of year. They are highest during the European production season for these products and lowest during the off-season. In the case of courgettes for example, the entry price rises from a base level of €451/tonne to €730/tonne in April and May.

Tariff rate quotas (TRQs) apply for a limited number of products (Table 3.4). These TRQs were established under the URAA and formalize long-established preferential access terms. Lower tariffs are applied to in-quota shipments. In addition to tariff quotas registered at the time of the Uruguay Round, the EU also establishes country-specific preferential quotas for certain products. This season, these include, inter alia, quotas for garlic, carrots, potatoes, dried onions and sweet peppers. For the most part, these are duty free.

Table 3.4: Tariff rate quotas on fruit and vegetable imports into the EC^1/

1/ Notified under the URAA as current access quotas and non tariffied product quotas. NB. No minimum access quotas were negotiated for fruits or vegetables
2/ In addition to the scheduled tariff quotas, the EU also establishes additional preferential quotas For example, this season these include an additional 5 880 tonnes for dried onions (0 percent duty vs. 10 percent in-quota duty); 6 200 tonnes for carrots (0 percent & 2.7 percent vs. 7 percent) for Switzerland and Slovenia; 9 500 tonnes for potatoes (0 percent and 1.9 percent vs. 3 percent) for Bulgaria, Lebanon and Slovenia; 14 350 tonnes for sweet peppers (0 percent vs. 1.5 percent) for Bulgaria, Cyprus, Israel and Romania; 4 000 tonnes for garlic (0 percent duty vs. 9.6 percent) for Chile, Latvia, Estonia, Lebanon and Poland
3/ Includes the 2.2 million metric tonnes tariff quota established under the URAA and a further preferential quota of 1.103 tonnes
4/ Mushrooms, prepared or preserved. Tariff level depends on mushroom type

Sources:
Uruguay Round of Multilateral Trade Negotiations, Schedule LXXX, European Communities, Marrakesh, April 1994. Notification concerning imports under tariff quotas, Committee on Agriculture, World Trade Organization, G/AG/N/EEC/40, July 2002
EU Taxation and Customs Union TARIC database

Under the URAA, the EU can implement special safeguard measures (SSGs) if the import price of certain products falls below a "trigger price", or if the quantities being imported exceed a "trigger volume". SSGs have been registered for all those products to which entry prices apply. The relationship between trigger prices and entry prices varies depending on the commodity and the time of year. In practice, many trigger prices are well above entry prices, limiting the relevance of the SSGs to importers.

Phytosanitary, sanitary and other control measures

In the European market, in particular, it is important to distinguish between the private standards and controls imposed by the buyers of imported produce, notably the supermarkets, and the public standards and controls which are legally mandated, notably those for MRLs.

Currently, the two main areas of control relate to MRLs and the phytosanitary status of imported produce.

The EU Agrochemical Registration Directive, introduced in 1991, aims to consolidate Members States' approach to pesticide regulation. This will involve a (much reduced) Community-wide list of approved pesticides and a harmonising of MRLs permitted in fresh produce. There are two concerns for suppliers of fresh produce to the EU. First, the reduction in the list of approved substances is likely to lead to the withdrawal of many of the cheaper, but now out-of-patent, products. Second, the MRLs are typically determined on the basis of supervised trials. For tropical products, in particular, there may not be sufficient data generated to establish an MRL, which could result in the MRL being set at the limit of determination (LOD), which is close to zero.^[23]

In practice, only a relatively small proportion of produce is sampled on entry to the EU. It is the buyers' own demands for samples to be laboratory tested for MRLs that are of greater importance to third country exporters, particularly where they are supplying supermarkets.

Phytosanitary certificates are generally required for all imports of fresh produce. Again, the level of inspection is very limited given the volume of produce entering the EU and the number of potential entry points.

3.2.2 Japan

In the fresh (and dried) fruit and vegetable sector, Japan applies a range of import controls. These include tariffs; phytosanitary rules; and special measures for imports of fresh onions, dried beans, Welsh onions (leeks) and shitake mushrooms.

Import tariffs

The tariff on fresh vegetables is mostly set at 3 percent, but is higher for some products including onions (8.5 percent) and sweet potatoes (12.8 percent). Tariffs are higher for frozen vegetables and generally set at 6 percent. Again there are exceptions; for example, the tariff for frozen sweet corn at 10.6 percent. Tariffs are higher still for dried vegetables, averaging around 9 percent. A number of categories of dried vegetables can be imported duty free from LDCs (but not from developing countries); for example, asparagus, avocados, cabbage, carrots, celery, cucumbers, garlic, lettuce, spinach and potatoes. Products that do not benefit from this duty-free preference include dried shitake mushrooms, onions, peas and beans, sweet corn and sweet potatoes.

Constant tariffs on fresh fruits range from 2 percent on papayas, 17 percent on pineapples and apples, up to 36 percent on citrus. Higher seasonal tariffs are applied to grapes and bananas, designed to coincide with the local season for competing fruits. In the case of grapes, ad-valorem tariffs are 7.8 percent between November and February, rising to 17 percent between March and October. Similarly, in the case of bananas, an off-season duty of 23.3 percent is applied between April and September, but with a preferential rate of 10.0 percent, rising to 29.2 percent between October and March, but with a preferential rate of 20.0 percent. In practice, all bananas enter under the preferential rate which is applied to developing countries (Tables 3.1 and 3.2).

For commodities with high constant tariffs or high in-season tariffs, the duty applied on dried fruits tends, on average, to be lower than for the fresh produce, for example, grapes 1.2 percent, apples 9 percent and pineapples 7.2 percent.

Japan operates zero rates of duty on cut flowers and comparatively low tariffs on other speciality products, including ginger, medicinal herbs, chilli peppers and garlic (Tables 3.1, 3.2 and 3.3).

Phytosanitary controls

Japan's phytosanitary barriers are a far more important determinant of what can and what cannot enter the market than its import tariff regime. All consignments of fresh fruit and vegetables require a phytosanitary certificate and are subject to import inspection on arrival. Dried fruits are subject to import inspection but are excluded from plant quarantine.

Imports of a number of fresh vegetables are banned from most countries because of plant disease restrictions. Fresh peppers, cucumbers, eggplants and potatoes are not imported in large quantities because of these restrictions. Fruits such as mangoes, papayas and lychees may be imported from specified origins (principally China, the Philippines and Thailand) provided they receive vapour heat and/or cold treatments. Other products are affected by the policy of fumigating any fresh produce shipments where insects are seen to be present, even if these are already endemic in Japan.^[24]

Fumigation can seriously damage the quality of imported produce, and this has been a problem in the case of light coloured vegetables such as lettuce and cauliflowers.^[25] In the case of the organic sector, random fumigation of organic fresh produce presents a major disincentive to export organic produce to Japan, because once fumigated the product can no longer be sold as organic. Exporters have experienced problems, even where hot air treatments have been applied and the products have been cleared by quarantine arrangements in the country of origin.^[26]

Other import controls

Fresh onions are the subject of a minimum import price. This was fixed during the Uruguay Round Agreement on Agriculture (URAA) at 73.7 yen/kg.

Restrictions were recently applied to imports of two vegetables ¯leeks and shitake mushrooms ¯ using the special safeguard provisions of the URAA. The safeguard measures were applied for six months during 2001 in the form of a TRQ.^[27] The TRQ was set at the average annual volume of imports of these two products during the previous three years. Punitive out-of-quota duties were applied at 266 percent for shitake mushrooms and 256 percent for leeks. Following retaliatory action by the Chinese, who were the major suppliers of these two products, in the form of 100 percent duties on key Japanese (non agricultural) exports, the TRQ was not extended beyond the initial six month period.

3.2.3 United States

Import tariffs

The United States employs a mix of specific and ad-valorem tariffs on fruits, vegetables and cut flowers. In common with the EU, it has tiered (seasonal) tariffs for a wide range of fruits and vegetables. For example, the in-season tariff on asparagus, which applies for ten months of the year, is 21.3 percent. Similarly high tariffs are levied on cantaloupes (29.8 percent) for imports made outside a six week time window. A single, year-round import tariff of 6.4 percent applies for most cut flowers. Medicinal herbs and other related products generally enter duty free.

Phytosanitary controls

All food products are subject to examination by the Food and Drug Administration (FDA) when they arrive in the United States. By law, all of these products must meet the same standards as domestically-produced products. The Animal and Plant Health Inspection Service (APHIS) inspects imported agricultural products. Importers must obtain phytosanitary certificates from the country of origin. Quarantine laws require a cargo to be inspected at the first US port of arrival. Where pests are discovered, unless they are endemic, APHIS will undertake fumigation. Where APHIS determines that imports of a certain product (often from a specific origin) may lead to the introduction of new, or not widely distributed, plant pests into the United States it introduces a ban. This was done recently in the case of mangoes from the British Virgin Islands.