Title: Rules of Origin and the Pacific fisheries trade with the EU
1Rules of Origin and the Pacific fisheries trade
with the EU
- Liam Campling
- School of Oriental and African Studies
- TRINNEX workshop PacificEU Economic
- Partnership Agreements Opportunities and
Challenges for the - Private Sector of New Trading Arrangements,
- 2728 November 2006, Port Villa, Vanuatu
2What Are Rules of Origin For?
- Two purposes of fisheries rules of origin
- To ensure that preferences provide developmental
benefits to recipient country - A tool of EU domestic commercial policy
- EU rules of origin are a ticket of entry for
PACP fish products and serve as a major barrier
to market access and associated industry
development
3What Are Cotonou Rules of Origin for Fish? (i)
- Wholly obtained fish based on qualifying
vessels - Qualifying vessels
- Registered flagged in EU, ACP and/or OCT (EU
territories) - Crew 50 nationals EU, ACP and/or OCT
- 50 ownership by nationals or a company based in
EU, ACP and/or OCT - Chartering (renting) permitted if EU fleet
decline access
4What Are Cotonou Rules of Origin for Fish? (ii)
- Automatic derogations (exemptions for set
quantities) for canned tuna and tuna loins - Bilateral cumulation available among EU, ACP
and/or OCT (i.e. their imports qualify as part
of production) - Regional cumulation with neighbouring (non-ACP)
developing countries available to ACP - but of no value to PACP
- Value tolerance 15 (per consignment)
- but very rarely used in practice
5Rules of Origin as Commercial Policy
- EU distant water fleet (DWF) can charge premium
on fish meeting rules of origin (RoO) ? acts as a
subsidy to DWF - Preferential access to EEZ for EU DWF under
Cotonou - EU processors able to source based on best market
price ? insulates them from ACP competition (i.e.
flexibility of supply) - Rules of origin are not a neutral instrument
(EC official) -
- In sum, EU RoO provide commercial benefit to the
EU. Understanding this point is central to the
success of proposed PACP reforms.
6PACP and Cotonou RoO for Fish
- Benefits
- Better than GSP on crew, ownership, chartering,
derogation, value tolerance - Intra-regional trade
- Signatorys ownership of plants not required
- Costs
- EU DWF marginally active in WCPO
- Limits strategic sourcing
- Barrier to development of PACP economies of scale
- Automatic derogation small and lacks stability
- Admin and compliance costs (for firms and
governments)
7PACP EPA Negotiations and RoO Reform
-
- On the Community side trade liberalisation
shall build on the acquis and shall aim at
improving current market access for the ACP
countries through inter alia, a review of the
rules of origin. - Cotonou Agreement, Article 37, para 7
8EU RoO Reform Three Scenarios
- A. Relaxing Cotonou RoO for originating fish
- Taxud 1) Delete crew condition
- 2) Simplify ownership criteria
- 3) Wholly originating or substantial
transformation (i.e. 40 value addition) - PACP 1) Any fish caught in PACP EEZs or high
seas by EU or PACP flagged vessels - 2) Fish caught in PACP EEZs by any vessel if
landed in a signatory state
9EU RoO Reform Three Scenarios
- B. Value Added Method (DG Taxud proposal)
- 40 value to be added in recipient country (based
on net production costs) - Price of originating fish value addition
- Problematic for tuna processing because of the
high cost of fish (especially loins) - Opposition from ACP and EUROTHON
- Possible reduction for fish products
- Possible combination with other methods such as
change in tariff sub-heading
10EU RoO Reform Three Scenarios
- C Change in Tariff Sub-Heading Method (PACP
proposal) - Product qualifies if there is a change in
Harmonised System (HS) code at the 6-digit
sub-heading - However, change at 4-digit heading would suffice
for fish - Canned/ loined tuna would easily qualify
- DG Taxud opposed to fillets as substantial
transformation
11Change in Tariff Sub-heading for Tuna
12Summary of Key Points
- Rules of origin a tool of EU commercial policy,
but - reform of fisheries rules of origin the
primary mechanism to improve PACP tuna market
access - PIFS recommendation on change in tariff
sub-heading method beneficial to PACP exporters
of tuna products but - likely to encounter resistance from EU vested
interests (but such is the nature of trade
negotiations)
13ANNEX 1 Cotonou and GSP RoO differences
- Cotonou
- Wholly obtained based on qualifying vessels
- Crew 50 nationals EU, ACP and/ or OCT
- Charting permitted if EU DWF offered access
- Automatic and specific derogations
- Bilateral cumulation with EU, ACP and/ or OCT
- Regional cumulation with neighbouring DCs
- Value tolerance 15 (ex-works)
- GSP
- Wholly obtained based on qualifying vessels
- Crew 75 nationals EU and/ or recipient
- No chartering
- No derogations bar specific for LDCs
- Bilateral cumulation with EU
- Regional cumulation for SAARC, Andean, ASEAN
- Value tolerance 10 (ex-works)