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Brussels, 17 October 2008

EU to restore import customs duties on cereals

Mariann Fischer Boel, Commissioner for Agriculture and Rural Development, announced that customs duties on cereals imports will be reintroduced as a reaction to the price decrease on the cereals market. A draft Regulation was put to the Management Committee for the Common Organisation of Agricultural Markets yesterday. It has now to be formally adopted by the Commission and will enter into force on the third day following publication in the Official Journal of the European Union. There are no export refunds on cereals exports.

In order to promote the supply of cereals to the Community market during the 2008/09 marketing year, Commission Regulation (EC) No 608/2008 of 26 June 2008 temporarily suspended customs duties on imports of most cereals for the 2008/2009 marketing year until 30 June 2009 (see IP/08/930). This regulation was prolonging the cereals duties suspension already put in place since the beginning of January 2008. It also allowed the Commission to reintroduce them in the event of disruption or threatened disruption of the Community market.

The fob price of common wheat, recorded in Community ports since the end of September, has gone clearly below 180% of the reference price. Given the interdependence of the markets for various cereals and the rapid impact of changes in the price of one cereal on other cereals, customs duties are being reintroduced simultaneously on all cereals.

As traders must not be penalised when cereals are already en route into the Community. transport time will be taken into account. Traders will be therefore allowed to release cereals for free circulation under the customs-duty suspension regime provided for in Regulation (EC) No 608/2008 if their transport to the Community starts, at the latest, on the day on which this Regulation is published.

The restoration of MFN duties for cereals would not have any disruptive effect on the EU market or any significant impact on prices. This precautionary measure is taken in order to avoid undue risk while intervention mechanism will be open from the 1st November onwards.

Background on import duties which applied after the restoration

The EU has bound tariffs for all cereals set under the GATT agreement. However, applied rates are different. The system originates in the Blair House Agreement between the US and the EU and involves setting tariffs on the basis of separate world reference prices for clearly defined cereals types. The duty is fixed on the basis of the difference between the effective EU intervention price for cereals including monthly increments, multiplied by 1.55 and a representative cif import price for cereals at Rotterdam.

The resulting duties will be set for durum wheat, high quality common wheat, rye, sorghum and maize at the level established by the bi-monthly fixing regulations. Tariff rate quotas were introduced in 2003 on barley and low and medium quality wheat in response to large imports from Community of Independent States countries.

For medium and low quality soft wheat, an annual Tariff Rate Quota of 2,989,240 tonnes is open, including a country-specific quota of 572,000 tonnes earmarked for imports originating in the United States and 38,853 tonnes for Canada.

The remaining 2,378,387 million tonnes is open to all other third countries. The duty payable on imports under the quota is set at €12/tonne.

For barley, annual Tariff Rate Quota of 306,215 tonnes is open with €16/tonne duty payable. There is another quota of 50,000 tonnes of malting barley at a duty of €8/tonne.

An erga omnes duty-free quota of 242,074 tonnes of maize was introduced in 2006 which was entirely used for 2007.

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