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Brussels, 13 June 2008

EU to maintain suspension of import duties on cereals

Mariann Fischer Boel, Commissioner for Agriculture and Rural Development, today announced that the suspension of cereal import duties will remain in force for the next marketing year - which will end on June 30, 2009 – unless market conditions justify their reintroduction before that date. The proposal, which was put to the Management Committee for cereals today, is a reaction to the continuing tight situation on the cereals markets and the resulting high price levels. At the same time, there are no export refunds on cereal exports.

In order to promote supply to the Community market in cereals during the 2007/08 marketing year, Council Regulation (EC) No 1/2008 of 20 December 2007 temporarily suspended customs duties on imports of most cereals for the 2007/2008 marketing year until 30 June 2008 (see IP/07/1977). It also allowed the Commission to reintroduce them in the event of disruption or threatened disruption on the Community market.

The outlook for the cereals market for the start of the next marketing year (2008/09) suggests that prices will remain high, given the low world stock levels. In order to make it easier to maintain a flow of imports which will help maintain market balance, there is a need to ensure continuity in cereal imports policy by maintaining the temporary suspension of customs duties on imports for the 2008/09 marketing year for cereals. Millet and buckwheat will be added to the list of products on which duties are suspended. Should the market situation change unexpectedly, the Commission could re-introduce import charges.

Background on import duties which applied before the suspension

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 duty was set at 0 for durum wheat, high quality soft wheat, rye and sorghum. The duty for maize was set at €1.93/t since 16 September 2007. 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, 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 split into four equal tranches of 594,597 tonnes, one of which is open each quarter to 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.

A duty-free quota of 242,074 tonnes of maize was introduced in 2006 which is split into two equal tranches open to all third countries. This quota has been entirely used for 2007.

For maize and sorghum imported into Spain and Portugal, there are reduced tariff import quotas since Spain and Portugal’s accession to the EU. An agreement between the EU and the US allows a fixed quantity of third country maize/sorghum to be imported, if necessary at a reduced duty (abatement), to compensate the US for the loss of its Iberian Peninsula markets. The current agreement applies to 2 million tonnes of maize and 0.3 million tonnes of sorghum to be imported annually into Spain. Amounts are reduced by any quantity of grain substitutes (e.g. starch residues, corn gluten feed and citrus pulp) imported into Spain in the same year. A tariff import quota of 0.5 million tonnes of maize into Portugal (tariff fixed to ensure that the quota is filled up to a maximum level of € 50 per tonne) was also agreed. In view of the low levels of the calculated duty and the good pace of maize imports, no abatement has been granted during 2007.

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