EU tariff rate quotas: Which quotas would be most important to be increased?

Transcription

1 Policy Briefing Series [PB/11/2016] EU tariff rate quotas: Which quotas would be most important to be increased? Ricardo Giucci, Mykola Ryzhenkov, Veronika Movchan German Advisory Group in cooperation with the IER Kyiv Berlin/Kyiv, June 2016

2 Contents 1. Introduction 2. Five criteria for assessing the impact of higher quotas 3. Criteria A and B: Importance for total exports and decline of exports on Russian market 4. Criterion C: Strong limiting effect of quota on exports to EU? 5. Assessment for each of the nine products 6. Summary of results Contact 2

3 1. Introduction Since April 2014 (autonomous trade measures and later DCFTA): Duty-free access to EU market for 95% of industrial goods and 83% of agro-food products But: Tariff rate quotas ( TRQs ) for 36 agro-food products However: Only nine quotas are currently fully-utilised Current discussion: Some of these nine quotas might be unilaterally increased by the EU, but certainly not all of them Thus: Need to set priorities Question: Which quotas would be most important to be increased? Approach: Assessment using five criteria 3

4 2. Five criteria for assessing the impact of higher quotas A. Large importance of product for Ukrainian exports? B. Strong decline of exports (in USD) to Russia since 2013? C. Strong limiting effect of TRQs on exports to EU? D. Short-term impact on production in case of higher quotas? E. Would small business benefit from higher quotas? Method for assessment A, B and C: On the basis of statistics D and E: Based on interviews with business representatives 4

5 3. Criteria A and B: Export importance and decline on RU market Criterion A Criterion B Category Exports 2015, USD m % of total exports 2015 % exported to RU 2013 % exported to RU 2015 Relative decline exports to RU Absolute decline exports to RU Wheat 2, % USD 8.4 m Maize 2, % USD 11.3 m Oats n/a USD 0.0 m Barley groats & meals Grape/apple juice % USD 0.3 m % USD 62.9 m Sugar % USD 0.4 m Processed tomatoes % USD 29.0 m Honey % USD 1.0 m Poultry % USD 71.4 m Sum 5, % USD m 5

6 4. Criterion C: Strong limiting effect of quotas? Criterion C Category Quota, t / y Out-quota duty Ad valorem equivalent 1 UA exports to EU, 2015, t 2 Exports to EU / quota Strong limiting effect on exports to EU? 3 Wheat 950, EUR / t 62.8% 1,548, Yes 4 Maize 400, EUR / t 5 3.8% 7,719, No Oats 4, EUR / t 65.7% 3, Yes Barley groats & meals Grape/apple juice 6, EUR / t 23.8% 16, No 10,000 From 18% to 40% EUR/hl EUR/t 29.3% 73, No Sugar 20, EUR / t 68.5% 19, Yes Processed tomatoes 10, % 14.4% 15, Yes Honey 5, % 17.3% 20, No Poultry 6 16,000 20, EUR / t EUR / t 24.8% 35.7% 26,076 4, Trade weighted; 2 - EU data; 3 - Effect is considered to be strongly limiting if exports / quota < 2; 4 - Exports also under EU global TRQ; 5 Since July 2014; 6 - Separate quotas for fillets and frozen carcasses; 7 - However, reallocation between sub-quotas is taking place Yes 7 6

7 5. Assessment for each of the nine products: Wheat A. 6.02% of total exports Large importance B. Exports to RU declined by USD 8.4 m No strong decline C. Exports*/quota = 1.6 Strong limiting effect of quota D. Arable land limited No short-term** impact on production E. High concentration Small companies would not benefit *TRQ was exceeded due to utilisation of EU s global TRQ for wheat ** In the medium/long term, yields and production can be increased by using better fertilizers and seeds 7

8 Maize A. 7.87% of total exports Large importance B. Exports to RU declined by USD 11.3 m No strong decline C. Exports/quota = 19.3 No strong limiting effect of quota D. Arable land limited No short-term* impact on production E. High concentration Small companies would not benefit * In the medium/long term, yields and production can be increased by using better fertilizers and seeds 8

9 Oats A. 0.02% of total exports No large importance B. No decline in exports to RU No strong decline C. Export/quota = 1.0 Strong limiting effect of quota D. Arable land limited No short-term* impact on production E. High concentration Small companies would not benefit * In the medium/long term, yields and production can be increased by using better fertilizers and seeds 9

10 Barley groats and meals A. 0.04% of total exports No large importance B. Exports to RU declined by USD 0.3 m No strong decline C. Export/quota = 2.6 No strong limiting impact of quota D. Sufficient crops and production capacities Short-term impact on production E. Supply is dominated by big and medium size companies Small companies would not benefit 10

11 Apple and grape juice A. 0.27% of total exports No large importance B. Exports to RU declined by USD 62.9 m Strong decline C. Export/quota = 7.3 No strong limiting effect of quota D. Plenty of fruit from orchards and sufficient production capacities Short term impact on production E. High concentration of juice producers, but many small orchards Small companies would benefit 11

12 Sugar A. 0.12% of total exports No large importance B. Exports to RU decreased by USD 0.4 m No strong decline C. Export/quota = 1.0 Strong limiting impact of quota D. Large idle production capacities Short term impact on production E. High concentration Small companies would not benefit 12

13 Processed tomatoes A. 0.05% of total exports No large importance B. Exports to RU declined by USD 29.0 m Strong decline C. Export/quota = 1.5 Strong limiting impact of quota D. Production and processing capacities can be increased rapidly Short term impact on production E. As of today, large companies produce and process tomatoes Small companies would not benefit 13

14 Honey A. 0.22% of total exports No large importance B. Exports to RU declined by USD 1.0 m No strong decline C. Exports/quota = 4.1 No strong limiting impact of quota D. Despite loss of capacities in Donbas, production recovered in one year Short term impact on production E. Many small producers Small companies would benefit 14

15 Poultry A. 0.61% of total exports No large importance B. Exports to RU declined by USD 71.4 m Strong decline C. Export/quota = 1.6 for fillets and 0.2 for frozen carcasses Strong limiting effect of quota for fillets D. Feed available and relative simple investment Short term impact on production (within ca. 4 months) E. High concentration Small companies would not benefit 15

16 6. Summary of results Category Large importance for exports? Strong decline of exports to RU? Strong limiting effect of quota? Higher production if quota increased? Would small companies benefit? Priority for higher quotas* Wheat Yes No Yes No No Medium Maize Yes No No No No Low Oats No No Yes No No Low Barley groats and meals Grape/apple juice No No No Yes No Low No Yes No Yes Yes High Sugar No No Yes Yes No Medium Processed tomatoes No Yes Yes Yes No High Honey No No No Yes Yes Medium Poultry No Yes Yes Yes No High * The setting of priorities depends on policy objectives and thus on the relative weighting of the five criteria. Our results are based on the simplified assumption that all five criteria have the same importance/weight. High priority = 3 or more criteria fulfilled; medium priority = 2 criteria fulfilled; low priority: 1 or less criteria fulfilled. 16

17 Contact Dr. Ricardo Giucci Veronika Movchan Mykola Ryzhenkov German Advisory Group c/o BE Berlin Economics GmbH Schillerstr. 59, D Berlin Tel: / Fax: / info@beratergruppe-ukraine.de 17

18 Annex: TRQs in comparison to production and total exports Category Production in t Total exports in t EU TRQ for Ukraine in t Common wheat, flours, and pellets 28,380,300 13,687, ,000 Maize, flour and pellets 23,288,800 19,067, ,000 Oats 488,500 57,801 4,000 Barley groats and meals 28,700 24,125 6,300 Grape and apple juice 96, ,728 10,000 Sugar 1,466, ,800 20,070 Processed tomatoes 161,100 21,990 10,000 Natural honey 71,148 36,013 5,000 Poultry and semi-finished poultry 882, ,470 62,960 16,000 20,000 18