Compromise sought on rice and sugar rules

Date: 02/10/1997

By Mark Turner

A HARD-fought compromise granting Europe's overseas territories tariff-free access to EU rice and sugar markets continues to divide member states - and may well fail to satisfy EU foreign ministers next week.

Nonetheless, after two months of intense discussion, the Luxembourg presidency hopes it has come up with a proposal which could finally satisfy Dutch calls for greater market access for its overseas islands while at the same time answering southern European fears of cheap competition.

But several points remain contentious, not least a proposal to ease the 'rules of origin' which determine whether rice or sugar qualify as Overseas Countries and Territories (OCT) produce.

Under current rules, commodities must undergo a certain amount of transformation in a country to be labelled as that country's product. The Hague is calling for more flexible rules for the Dutch Antilles to allow them to benefit as a conduit for goods from other African, Caribbean and Pacific (ACP) countries.

This is strongly contested by EU rice producers such as Italy, which fear that relaxing the rules could open Union markets to competition world-wide.

Under the compromise tabled by Luxembourg, rules of origin would remain but would be based on value added in the country concerned rather than on the degree of transformation. But critics claim this would undermine previous EU decisions to harmonise its rules of origin.

Although Union governments are close to agreeing on an OCT tariff-free rice quota of 160,000 tonnes a year (including 125,000 tonnes of ACP produce) with a twice-yearly review, they cannot settle the figures until the rules of origin are decided.

Dutch demands that no EU safeguard measures should be allowed to block OCT imports and calls for a declaration guaranteeing trade preferences beyond the year 2000 are also contentious.