Table of Contents

• I. INTRODUCTION
• II. MARKET ACCESS
  • A. European Community (EC)
  • B. North America
  • C. Japan
  • D. Other markets
• III. SANITARY AND PHYTOSANITARY MEASURES
  • A. Overall Framework
  • B. Sanitary requirements
  • C. Pesticide residue
  • D. Phytosanitary
• IV. CONCLUDING REMARKS

I. INTRODUCTION

1. This document reviews policy developments affecting international trade in tropical fruits, primarily commitments under the Uruguay Round (UR) since their implementation in 1995. Prior to the Round, the main policy instruments affecting trade in tropical fruit were quotas, tariffs, and sanitary and phytosanitary measures. These instruments were retained under the UR, with the exception of quotas which were converted to tariff equivalents. Other elements emerging from the UR negotiations such as minimum access provisions and the reduction of production and export subsidies, play a lesser role in trade of tropical fruit.

2. This document is composed of two parts. The first deals with market access issues (mostly tariffication and an update of tariff reductions) in certain markets. These markets were selected because of their importance in terms of shares of the global value of imports of tropical fruit. Of the US$2.2 billion value of tropical fruit imported globally in 1996, the European Community (EC) accounted for 50 percent; North America, 26 percent; and Japan, 10 percent. Several smaller importing countries made up the balance.

3. The second part of the document deals with the broader issues surrounding sanitary and phytosanitary measures (SPS), which are expected to be of growing importance to international trade in tropical fruits. As these issues are considered to be of greater significance than those concerning market access for tropical fruits, two additional technical papers have been prepared to supplement this review: phytosanitary aspects of the SPS Agreement CCP: SG TF 98/6, and the sanitary aspects of the SPS Agreement CCP: SG TF 98/7.

II. MARKET ACCESS

4. One feature of the Agreement on Agriculture which is of relevance to tropical fruit is the conversion of import quotas, variable levies and voluntary export restraints to tariff equivalents (tariffication) and commitments for the reduction of tariffs over the implementation period of the Round. Developing countries had the option of setting bound tariff levels. The average reduction for the developing countries for all agricultural commodities taken together was set at 24 percent with a minimum reduction of 10 percent (compared to 36 percent with a minimum of 15 percent for developed countries), and a longer transition period (10 years instead of the 6 years for developed countries).

5. The following section briefly reviews progress in the reduction of tariffs as committed by the major importing countries under the UR.

A. EUROPEAN COMMUNITY (EC)

6. In the EC, market access provisions for tropical fruits consist mainly of customs duties, which are all ad valorem rates. Furthermore, unlike other fruit and vegetables, mostly temperate or sub-tropical (e.g. citrus), tropical fruits are not subjected to the entry price mechanism or import licensing. Table 1 lists the EC commitment on tariff reduction under the UR including the levels reached in 1997. It should be noted, however, that under its various preferential schemes, duties under tariff quotas on some fruit have already been reduced to zero or will reach zero at the end of the UR implementation period (Table 2).

7. The reduction of tariffs on guavas, mangoes, mangosteen, papayas, lychees, passion fruit and carambola to zero by 2000 would eliminate the competitive advantage of countries which previously enjoyed preferential treatment, namely the African, Caribbean and Pacific (ACP) countries signatories to the Lom� Convention with the EC, countries in the Mediterranean Basin which enjoy preferential access to the EC and countries falling under the EC's GSP scheme. The new tariff regime would bring the former preferential supplying countries into line with other exporting countries, and could result in shifts in the origin of supplies and a boost to demand. Similarly, the reduction in tariffs for pineapples, avocados, limes, durian and rambutan should expand demand for these fruits.

8. In terms of domestic support, the only significant assistance is provided to manufacturers of "tinned pineapples" in producing countries, namely Guadaloupe and Martinique. Production aid is granted to processors who undertake to pay producers at least the minimum price fixed each year.

B. NORTH AMERICA

9. Imports of tropical fruits into the United States which are not covered by preferential trade agreements are levied either a fixed or ad valorem tariff. Countries which enjoy duty free access to the United States include those belonging to the Caribbean Basin Economic Recovery Act (CBERA), namely Antigua and Barbuda, Aruba, Bahamas, Belize, Costa Rica, Dominica, Dominican Republic, El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Monserrat, Netherlands Antilles, Nicaragua, Panama, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Trinidad and Tobago, and the British Virgin Islands; the Andean Trade Preference Act (ATPA) members namely, Bolivia, Colombia, Ecuador, Peru and Venezuela; and Israel.

10. In addition to these agreements, the United States has a special relationship with Mexico under the North American Free Trade Agreement (NAFTA). Under NAFTA, all tropical fruits shipped from Mexico, except guavas (if imported between 1 June and 31 August), avocados, and papayas, have been allowed duty free entry into the United States from 1 January 1998. Guavas, mangoes and mangosteens (entering between 1 September and 31 May), and pineapples were the first fruit to enter duty free under NAFTA in 1994. These were followed by full-year free access for mangoes and mangosteen in January 1998. The rest, namely avocados, papayas, and guavas(imported between 1 June and August 31) will only be allowed duty free entry from 1 January 2003.

11. As mentioned above, developing countries which do not belong to the above agreements, namely those from Africa, Asia and the Pacific, are subjected to either fixed tariff rates (in the case of pineapples, avocados, guavas, mangoes and mangosteens) or ad valorem tariffs (for papayas and other fruits) (Table 3). Ad valorem tariffs were reduced by 1 percent for papayas and 5 percent for tropical fruit under the HS code 08.10.40 category in 1996, according to the latest tariff schedules published by WTO. Fixed rates for other fruits were also reduced by 6 percent for pineapples and 5 percent for avocados.

12. The other North American market, Canada does not levy import duties on tropical fruit shipments, irrespective of country of origin or variety of fruit. The Central American market of Mexico on the other hand imposes a 50 percent ad valorem base rate tariff on all tropical fruits imported in 1995, except for those originating from the United States. A reciprocal arrangement exists with that country, as described above. By 1996, Mexico had lowered its import duties to 20 percent well below its bound rate commitment of 36 percent by 2004(Table 4).

C. JAPAN

13. Market access rules for imports of tropical fruits into Japan are relatively straight forward. All duties are ad valorem, and apart from those applicable to pineapples, rates are low and would not be considered inhibitory to trade. Japan sources a significant portion of its pineapples domestically, principally from Okinawa and this is reflected in the relatively high base and bound duties for this fruit (Table 5). Immediately before the commencement of the UR implementation in July 1995, Japan reduced its import duties on tropical fruits, except pineapples, by an average of 43 percent (50 percent reduction for avocados). Initially, it was thought that this would result in a greater assortment of tropical fruits becoming available in the Japanese market. However, slower economic growth over the last three years has curtailed the expansion in demand for non-traditional imports.

D. OTHER MARKETS

14. Imports into New Zealand were duty free even before the Uruguay Round, while in Australia duties were reduced from 2 percent to zero under the base rate commitment. Some expansion in demand has occurred in both countries primarily due to population and income growth. The continuation of duty-free imports of tropical fruits from all origins into China, Hong Kong Special Administrative Region, and the duty-free access to the Singapore market from ASEAN suppliers (10 percent bound rate on imports from non-ASEAN countries ) would suggest that the Southeast Asian market will continue to expand. The Republic of Korea, set relatively high base rate duties ranging from 50 percent to 59.2 percent, as previous quotas were converted to tariff equivalents, and its average 15 percent tariff reduction commitment would consolidate rates at 45 percent by the year 2004. This country's import licensing mechanism was finally dismantled in July 1997 in conformity with tariffication requirements. In 1996, actual import duties were generally somewhat lower than the UR Commitments (Table 6). For pineapples at 40 percent they were even below final bound rates.

III. SANITARY AND PHYTOSANITARY MEASURES

15. The major impact of the Uruguay Round on tropical fruit trade is expected to come from the Agreement on the Application of Sanitary and Phytosanitary Measures. The Agreement is expected to lead to a change in regulatory measures which are considered to impede trade unfairly. As sanitary and phytosanitary measures are each treated in greater detail in documents CCP: SG TF 98/6 and CCP: SG TF 98/7, the following section briefly reviews developments in the overall SPS framework.

A. OVERALL FRAMEWORK

16. The most relevant aspects to trade in tropical fruits are as follows:

• The WTO Committee on SPS established under the Agreement on the Application of Sanitary and Phytosanitary Measures is responsible for drawing up a list of international standards (Prepared by the International Plant Protection Convention as regards plant health and Codex Alimentarius as regards food safety) required to gain access to international markets and to minimize health risks.
• WTO members are committed to ensuring that SPS measures are only applied to the extent necessary to protect human, animal or plant life or health, and that these are based on scientific principles and are not maintained without sufficient scientific evidence (Art.2) in order that countries do not arbitrarily decide on the risks against which they wish to be protected.
• WTO members are committed to accepting as equivalent, even if these differ from their own, those measures that objectively demonstrate the appropriate level of sanitary protection (Art.5) including (and thus reducing the expense of certification) recognition of the concept of pest or disease-free areas (Art.6) to minimize the extensive differences that exist between countries as regards the measures adopted against the risks of disease from fresh fruit and vegetable imports.
• There is recognition of the difficulty that the Agreement entails for many countries, especially developing countries, in meeting the sanitary and phytosanitary requirements of importers, with special provisions being made for technical assistance and special treatment allowing, in particular, least-developed countries (LDC) to delay implementation of the SPS agreement for up to 5 years (Art.14), compared to the 2 year maximum for other developing countries.

B. SANITARY REQUIREMENTS

17. In relation to food safety, the SPS and Technical Barriers to Trade (TBT) Agreements use Codex Standards as the international benchmark for most foods, including tropical fruits. The Codex Alimentarius Commission is the international body responsible for the execution of the Joint FAO/WHO Food Standards Programme. Codex Alimentarius is a collection of international food standards adopted by the Commission and presented in a uniform manner. Standards established by the Codex Committee on Fresh Fruits and Vegetables and subsequently adopted by the Codex Alimentarius Commission include those for pineapples, papayas, mangoes and carambola (adopted in 1993), lychees and avocado (adopted in 1995), and mangosteens (adopted in 1997). The most recent Seventh Session of the Codex Committee on Fresh Fruits and Vegetables (September 1997) also finalized draft standards for pomelos, guavas, and chayotes for submission to the Commission for adoption at its Twenty Third Session in June 1999.

C. PESTICIDE RESIDUE

18. Regarding pesticide residue levels, most developed country markets are in the process of completing or have completed the drawing up of tolerance levels for imports of tropical fruits. At the time of writing this document, information was available only for the EC. It is hoped that information on other markets would be made available during the discussion at the Session of document CCP: TF SG 98/7 regarding sanitary issues. In the EC, tolerances have been fixed for the most commonly used chemicals, and also Maximum Residue Levels (MRL) for several fruits. Information on these have been appended as Table 7. The MRLs should be read in conjunction with the legend at end of Table 7.

D. PHYTOSANITARY

19. On the question of phytosanitary requirements for tropical fruits, the following general factors need to be taken into account:

• tropical fruits tend to be highly perishable and easily damaged;
• tropical areas tend to have plenty of pests and considerable pest problems;
• phytosanitary treatments for tropical fruits tend to be difficult to develop;
• tropical fruits have many internal feeding pests, which are impractical to manage through inspection;
• fruit flies are the single biggest pest problem;
• tropical fruit producing countries tend to be smaller and poorer - less technically capable of meeting phytosanitary requirements of trading partners in developed countries;
• field management and treatment in tropical countries tends to be small-scale and more difficult to coordinate and audit for phytosanitary certification purposes; and
• timely, efficient, and modern transport is frequently lacking for the secure movement of fruit from tropical locations;

20. A major development having implications for the cost-effectiveness of phytosanitary treatments of tropical fruit exports from developing countries was the decision reached at the 9th meeting of the Montreal Protocol in September 1997. At that meeting, the 163 countries that are signatories to the Protocol agreed to phase-out the use of methyl bromide as a fumigant. In developed countries, the complete ban would come into effect by 2005. For the United States, which accounts for about 40 percent of global use, under the Clean Air Act the phase-out would occur by 2001. It is likely that any further changes to the agreement would result in nearer deadlines rather than extensions.

21. Fumigation with methyl bromide has long provided the cheapest, easiest and most practical way to meet phytosanitary requirements for many tropical exports, including fruit, vegetables, flowers, plants, grain, and wood. Therefore, there is a need to find alternative treatments to avoid severe negative effects on exports of tropical fruit.

IV. CONCLUDING REMARKS

22. Under the Uruguay Round, the reduction in tariffs on imports of fresh tropical fruits is not expected to have a major impact globally as duties were already low in most major markets. However, for countries which will lose their competitive advantage due to the erosion of preferential access, it may be expected that adjustments will be required to maintain market shares.

23. The harmonization of sanitary and phytosanitary measures are expected to benefit trade in fresh tropical fruits in the longer run. However, adjustments will also be required by exporting countries, in particular as they phase out the use of long-established treatment methods with methyl bromide, and work towards alternatives such as hot-water immersion or irradiation. Although a longer phase-out period is stipulated for developing countries (2015) than for developed countries (2005), it is widely believed that if bans come into place in developed country markets then imports of tropical fruits treated with methyl bromide may not be allowed. This situation could present major problems for many developing countries, particularly if the costs incurred in meeting SPS standards (including investment in new treatment plants etc.) outweigh the benefits for small export volumes.

24. In the longer run, success in expanding exports would depend on the efforts of supplying countries wishing to penetrate or retain markets to adapt to the changing international trading environment. Investment in new treatment infrastructure must be in tandem with market expansion efforts to optimize returns on investment. Therefore, it may be prudent for exporting countries to capitalize on gains achieved under the UR and sustain demand expansion with continued market development activities.

Table/Tableau/Cuadro 1

NOTES/NOTES/NOTAS

1_/ Applicable if less than or when no conventional duties exist.

Applicable dans le cas o� les tarifs douaniers sont plus bas que les tarifs conventionnels ou quand ils n'existent pas.

Aplicable cuando los aranceles son m�s bajos que los convencionals o cuando no existen.

2_/ Applicable to imports from GATT members or countries the EC has concluded MFN agreements.

Applicable aux importations provenant des pays members du GATT ou de ceux ayant conclu des accords du type MFN avec les pays de la CE.

Aplicable a las importaciones procedentes de los paises miembros del GATT y de aquellos que hayan concluido acuerdos de tipo NMF con los de la CE.

3_/ Based on the Geneva Protocol to the GATT (1987).

Bas� sur le Protocole GATT de Gen�ve (1987).

Basado en el Protocolo GATT de Ginebra (1987).

4_/ To be implemented in equal annual instalments beginning on 1 July 1995 to 1 July 2000.

Doit �tre mis en place en quote pars �quivalentes annuelles � partir du 1er juillet 1995 jusqu'au 1er juillet 2000.

A ser implementadas en cuotas anuales iguales a partir del 1ro de juilio de 1995 hasta el 1ro de julio del 2000.