1. WTO, Bilaterals and Mediterranean product policy Pierluigi Londero – Dangiris Nekrasius Agricultural Trade Policy Analysis DG for Agriculture and Rural Development European Commission CAL/MED Consortium Workshop II Washington DC 7 December 2006

2. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 2 Outline  Introduction  WTO negotiations: market access and Mediterranean products  Free Trade Areas, Regional Trade Agreements: where are we?  An example: the EU-South Africa Trade Agreement  Conclusions

3. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 3 Outline  Introduction –Current state of play in DDA  WTO negotiations: market access and Mediterranean products –Fruit and vegetables: tariff structure and trade pattern –Market access and sensitive products: steps of the analysis  Free Trade Areas, Regional Trade Agreements –Ongoing negotiations and new areas of interest  An example: lessons to be learned from the EU-South Africa Trade Agreement (TDCA)  Conclusions

4. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 4 Current state of play in market access / sensitive products  Market access remains one of the main areas of contention in DDA –Different interests in approach of exporters and importers logical –Lack of any objective basis for discussion more problematic  TRQ expansion: differences in approach are fundamental –Exporters opt for a general link of TRQ expansion to consumption –Importers insist on relevance of current trade parameters –The result is lack of transparency on potential product coverage  Formula for TRQ expansion is the key –Percentage of sensitive tariff lines directly linked to their treatment –Percentage of Special Product indirectly linked to Sensitive Products

5. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 5 Fruit and Vegetables: Tariff structure and recent trade developments  EU Tariffs (AVEs) concentrate in the lower tariff bands –Tariff peaks for garlic and mushrooms  Entry price system  Most traded (non tropical) fruits show remarkable world trade growth –Grapes trade doubled since early 90’s –Oranges essential for US and MED countries –Apples most traded fruit, China has joined the export club

6. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 6 World grape exports and imports

7. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 7 World orange exports and imports

8. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 8 World apple exports and imports

9. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 9 Methodological choices for impact analysis  The 4 stages of market access analysis –estimate static-price gap (world/internal price) for all EU tariff lines –analyse impact of incremental changes by thresholds –apply econometric analysis to estimate impact on sectors –refine analysis based on market expertise  The limitations of the 3rd stage –CGE models cannot provide the detail and reliability needed for policy decisions –PE models have more policy and market detail; but do not cover all sectors –choice of limiting liberalisation only on EU driven by policy questions  The analytical choice –OECD’s AGLINK in-house model used –improvements in import demand implemented (subsequently verified by OECD) –no change in parameters, no adjustment in results –caveats of the model clearly identified (no sugar, f&v, problems in poultry)

10. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 10 Ad-hoc analysis for fruit and vegetables  Identify sensitive products –As a result of a tariff line per tariff line analysis –Taking into account potential preference erosion –Assessing the importance of certain products for the economy for certain regions/Member States  With some specific questions for this sector –What assumptions for the Entry Price System? –What strategy for tariff lines with low tariffs? –Which approach for products which enter the EU market at prices above the entry price level?

11. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 11 Bilateral trade agreements New impetus after the suspension of DDA talks  Ongoing bilateral negotiations –MEDA –MERCOSUR –ACP (including pending question of integration of South Africa) –Gulf Cooperation Countries  New impetus/areas of interest –South Korea –ASEAN –India –Russia –Ukraine

12. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 12 Lessons from the EU-South Africa Trade Agreement Main features of South African Fruit and Vegetable sector /1

13. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 13 Lessons from the EU-South Africa Trade Agreement Main features of South African Fruit and Vegetable sector /2

14. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 14 Lessons from the EU-South Africa Trade Agreement Main features of South African Fruit and Vegetable sector /3

15. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 15 Lessons from the EU-South Africa Trade Agreement Main features of South African Fruit and Vegetable sector /4

16. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 16 Lessons from the EU-South Africa Trade Agreement Main features of South African Fruit and Vegetable sector /5

17. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 17 Lessons from the EU-South Africa Trade Agreement Trade, Development and Cooperation Agreement (TDCA)  Trade “liberalisation” starting in 2000  Annex IV of the TDCA sets the pace for access to EU market and classifies between 8 lists: –List 1 to 4: trade liberalized already or will be liberalized in 2010 at the latest (e.g.: avocados, grapefruit, mandarins and clementines, apricots, peaches, plums, etc.). –List 6: Introduction of TRQs (strawberries, pears, apricot, peaches, tropical fruit (20089272), mixed fruits (20089258/74/78/98), orange, apple and pineapple juices) –List 7: no trade liberalisation (oranges, lemons, table grapes, apples, pears and quinces, tomatoes, other veg. (20049010, 200560/80), etc.

18. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 18 Lessons from the EU-South Africa Trade Agreement Main features of South African Fruit and Vegetable trade /1

19. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 19 Lessons from the EU-South Africa Trade Agreement Main features of South African Fruit and Vegetable trade /2

20. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 20 Lessons from the EU-South Africa Trade Agreement Main features of South African Fruit and Vegetable trade /3

21. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 21 Some tentative conclusions  WTO negotiations: Market access parameters (in particular sensitive products) far from reaching an agreement  The suspension of WTO talks has brought a new impetus to bilateral and regional trade negotiations  It is difficult to assess the impact of past trade agreement if they have not yet come into full implementation

22. Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II7 December 2006 22 For further information  EU agriculture and CAP reform http://europa.eu.int/comm/agriculture/index_en.htm  EU agriculture and trade http://europa.eu.int/comm/agriculture/external/wto/index_en.htm  Agricultural Trade Policy Analysis http://europa.eu.int/comm/agriculture/publi/map/index_en.htm