Report on the Implementation of the derogation to ... - Trade Websites

Final <strong>Report</strong>
RoO Derogation under the PACP-IEPA
term gives the PACP, other preference-receiving third countries and EU-based processors
some breathing space in the medium term.
• Direct preference erosion through the negotiation of new free trade agreements (FTAs) by
the EU with third country competitors. For example, if the EU were to negotiate an FTA with
the ASEAN group, or even bilateral agreements with individual states such as Thailand
and/or Vietnam, then the PACP and other third countries would face intensified competition
on the extra-EU import markets for canned tuna and tuna loins as ASEAN countries would
certainly push for duty-free market access rather than the current GSP preference of 20.5%.
• Indirect preference erosion due to the rising importance of FTAs between other canned tuna
importing countries (e.g. Australia, New Zealand and Japan) and canned tuna supplying
countries (e.g. Thailand). Although PACP countries do not export much canned tuna to
these markets, the increased global market share achieved by tuna supplying countries (e.g.
Thailand) indirectly erodes the competitive advantage of the PACP trade preference as the
competitor enhances its buying power and economies of scale enabling it to sell more
cheaply on EU markets.
7.3 GSP+ Reforms
As part of a review of its Generalised System of Preferences (GSP) regime, the EU is considering
some reforms of the GSP+. As detailed elsewhere in this report, the duty-free market access that
GSP+ status provides to several Latin American countries (especially Ecuador) is an important
dynamic in the extra-EU import market for canned tuna and tuna loins. The reform of GSP+ includes:
1. The exclusion of high- and middle-income developing countries;
2. A new set of GSP+ ‘vulnerable’ countries, but the proposal does not (yet) formally list new
GSP+ recipients. 344
A potential outcome of the reform is the Philippines graduation to GSP+, 345 subject to ratification
and implementation of the 27 conventions on good governance, human rights and the environment.
This would give this country duty free access to the EU and threaten the position of several third
country suppliers of canned tuna, including PNG. For some observers, it may also raise questions
around Philippine investment in PNG, but it is likely that the need for tuna resource access, the lure
of global sourcing, and MSC certification will continue to support medium-term development in
PNG.
It is worth noting also that the EU already institutionalised some reforms of the GSP RoO for fish and
fish products in November 2010. These include the following:
1. The requirement that 75% of the crew were relevant nationals was deleted;
2. The ownership requirement was reduced from the prior 75% to 50%; and
3. The value tolerance method was both simplified and increased from 10% to 15%. Note that
the 15% value tolerance provision under the Cotonou Agreement was rarely used by tuna
processors, but the GSP simplification may increase its utilization by GSP countries. 346
These relaxations of GSP RoO could significantly benefit the Philippines should it graduate to the
GSP+.
344 European Commission, COM(2011) 241 final.
345 Commission Staff Working Document 2011.
346 Commission Regulation (EU) No 1063/2010; Bilal et al. 2011; Campling 2008a.
Linpico s.a.r.l. Page 170