RECOMMENDATION on the draft Council decision on the conclusion of the Interim Partnership Agreement between the European Community, of the one part, and the Pacific States, of the other part

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

EXPLANATORY STATEMENT

OPINION OF THE COMMITTEE ON FISHERIES (27.10.2010)

RESULT OF FINAL VOTE IN COMMITTEE

9.12.2010 - (05078/2010 – C7-0036/2010 – 2008/0250(NLE)) - ***

Committee on International Trade
Rapporteur: David Martin

Procedure : 2008/0250(NLE)

Document stages in plenary

Document selected :

A7-0365/2010

Texts tabled :

A7-0365/2010

Debates :

PV 17/01/2011 - 17
CRE 17/01/2011 - 17

Votes :

PV 19/01/2011 - 6.6
Explanations of votes
Explanations of votes

Texts adopted :

P7_TA(2011)0012

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION
EXPLANATORY STATEMENT
OPINION OF THE COMMITTEE ON FISHERIES
RESULT OF FINAL VOTE IN COMMITTEE

on the draft Council decision on the conclusion of the Interim Partnership Agreement between the European Community, of the one part, and the Pacific States, of the other part

(05078/2010 – C7-0036/2010 – 2008/0250(NLE))

(Consent)

The European Parliament,

– having regard to the draft Council decision (05078/2010),

– having regard to the draft Interim Partnership Agreement between the European Community, of the one part, and the Pacific States, of the other part (05558/2/2009),

– having regard to the request for consent submitted by the Council in accordance with Articles 207(4) and Article 218(6), second subparagraph, point (a), of the Treaty on the Functioning of the European Union (C7-0036/2010),

– having regard to Rules 81 and 90(8) of its Rules of Procedure,

– having regard to the recommendation of the Committee on International Trade and the opinion of the Committee on Fisheries (A7-0365/2010),

1. Consents to conclusion of the Agreement;

2. Instructs its President to forward its position to the Council, the Commission and the governments and parliaments of the Member States and of the Pacific States.

Economic Partnership Agreements (EPAs)

In 2000 the ACP and EU agreed to conclude new trading arrangements compatible with the World Trade Organisation (WTO) rules to replace the unilateral regime of trade preferences granted by the EU to imports from the ACP that prevailed at the time.

Negotiation of the new Economic Partnership Agreements (EPAs) was initiated in 2002 with the aim of being concluded by 31 December 2007, knowing that, on the 1st January 2008, the WTO waiver covering the existing trade arrangements between the ACP and the EU would expire. Since EPAs aim at building on and strengthening the regional integration processes in the ACP, negotiations have been conducted at the regional level with 6 self-declared EPA regional groupings.

The EPA negotiation process involved the all-ACP level to determine broad cross cutting themes of interest whilst the specific issues of interest of the negotiations were and still are being determined at the national and regional level.

CARIFORUM has since been the only regional grouping to sign a comprehensive EPA.

Considering that the other negotiations were unlikely to conclude comprehensive EPAs for all ACP partners/regions, it was decided to conclude interim EPAs focusing on trade in goods and WTO compatibility by the end of 2007, with the intention of negotiating comprehensive EPAs during 2008.

In the Pacific region only Fiji and Papua New Guinea, the region's largest economies, entered into the interim agreement.

Interim Economic Partnership Agreements (IEPAs)

"Interim" Economic Partnership Agreements are agreements on trade in goods aimed at preventing a disruption of ACP trade with Europe. Whilst the interim agreements can be considered a first step in the process, in legal terms they are completely independent international agreements that may not necessarily lead to a full EPA.

It should also be noted that the possible consent by Parliament to an interim EPA does not prejudge Parliament's position concerning the consent on the comprehensive EPA, because the procedure of conclusion relates to two different international agreements.

Fiji

Fiji is an island state with a population of 854, 000, 87% of whom inhabit the two largest of the 322 islands. The country has experienced political difficulties in the past including military coups, and tensions between indigenous Fijians and Indians settled there during the 19th century.

Further problems the country has experienced have been troubles in their sugar and textile industries, a loss of skilled workers through emigration causing a skills-drain, and natural disasters including cyclones.

EU relations with Fiji in the past have focused on rural aid and education. Fiji has beneficial market access for sugar (support from the sugar reform accompanying measures). Fiji gave commitments to the EU on essential elements regarding human rights, democratic principles, and the rule of law. The Council decided on enhanced political dialogue between the two groups and established a framework for future cooperation.

Papua New Guinea

Papua New Guinea is the largest of the island states, accounting for 70% of the region's population and volume of trade with the EU. It is an ethnically diverse state comprised of 344 islands and with around 800 languages spoken. The majority of the population are traditional subsistence societies. The terrain has suffered environmental damages through the exploitation of natural resources. Development cooperation is being strengthened through closer cooperation between the government of Papua New Guinea and its largest donor, Australia. The main focus of EU- Papua New Guinea development cooperation has been rural development and related issues. Human resource development, natural resource management, and educational development are being highlighted as beneficial pursuits to provide better services and income generation.

Interim Partnership Agreement between the European Community and the Pacific States

The interim agreement between Papua New Guinea, Fiji and the European Community was initialled on 14 December 2007. These two countries were the only members of the Pacific Region to enter into the agreement, with the other members of the Pacific regional grouping - because of their low levels of trade in goods with the EU - choosing not to sign.

Fiji and Papua New Guinea entered the agreement mainly with the hope of protecting their sugar and tuna industries, which would have suffered greatly under the Generalised System of Preferences.

The Interim Agreement covers rules of origin and market access issues. Regarding rules of origin, the agreement covers rules of origin in relation to fisheries, textiles and agriculture, leading to investment and employment opportunities. Regarding Market Access, duty and quota free access to markets would be granted which would provide investment and employment opportunities. Trade and development issues are to be dealt with within the wider regional framework. The interim agreement has also required governments to give up policy space in the form of regulatory power.

Criticism

Negotiations of the interim agreement came under high levels of criticism from members of civil society, and politicians from the Pacific region. Criticism of the EU negotiation strategy emerged, in particular of the pressure placed upon Fiji and Papua New Guinea to sign the interim agreement, under threat of losing preferential access to European markets. Civil society groups criticised these actions arguing that they had diminished levels of solidarity between Pacific states. The criticism said that the EU's motivation behind EPAs was merely to secure access to raw materials, and to ensure rivals, China for example, do not gain access to them, or furthermore that these materials were not converted through value-adding processes in their country of origin.

Regional Impact and Implications for third Party Relations

Regional solidarity has greatly diminished according to critics of the interim agreement. The EPAs have evolved as each regional grouping (except CARIFORUM) has disintegrated under the pressure and time constraints to conclude interim agreements. The Pacific regional grouping of ACP countries is made up of 14 island states with a combined population 7 million people. More so than in any other region, the Pacific countries vary in size and characteristics to a large extent. The IEPA should not reduce both political interests and public sentiment towards economic integration in the Pacific.

The agreement may also have implications for relations between the Pacific region and its closest and largest trading partners, Australia and New Zealand. The current agreement's stipulations on trade in goods may act as an impediment to future trade agreements with these countries. For example, any future trade concessions agreed between the Pacific and Australia (its largest trading partner) would have to be granted to the EU also. Therefore, the EPA has implications for future trade negotiations between the Pacific and Australia and New Zealand. The Pacific Agreement on Closer Economic Relations (PACER) requires that any agreement entered into by PACP with another developed country must be consulted with Australia and New Zealand, who are unlikely to accept being discriminated against.

Specific provisions regarding rules of origin

The purpose of the specific provisions regarding rules of origin for fisheries products is the development of onshore processing capacity for fish in the ACP Pacific States to create local employment and income. The fisheries industry is a primary source of employment in particular for women. According to the Commission, there is a the low risk of destabilising EU markets in view of the limited fishing capacity of the Pacific States' fishing fleet, the limited supply of wholly-obtained fish and the limited on-land processing capacity. Nevertheless, sources indicate that several new domestic tuna processing plants, ancillary industry and supporting infrastructure are being developed in Papua New Guinea in addition to the three operational plants. It is therefore important to closely monitor the situation and your Rapporteur calls on the Commission to present to Parliament a report on these specific aspects of the Pacific States fisheries sector as well as on the management of fish stocks in the Pacific including sustainable development practices.

Comprehensive EPA Negotiations

The European Commission hopes to conclude a comprehensive Economic Partnership Agreement with the Pacific regional group and talks are ongoing with all 14 countries as a region.

Your Rapporteur, after consulting numerous representatives from Papua New Guinea and the Republic of the Fiji Islands, considers that the European Parliament should give its consent on the Interim Partnership Agreement between the European Community, of the one part, and the Pacific States, of the other part, if it received firm commitments from the Commission and the Council to ensure that:

- There is an early determination and provision of the share of the Aid for Trade resources. These funds should be additional resources and not be merely repackaging of EDF funding. They should conform to the priorities of Papua New Guinea and the Republic of the Fiji Islands. Their disbursement should be timely, predictable and in line with the execution schedules of national and regional strategic development plans;

- In the comprehensive EPA, a Parliamentary Committee be established to monitor the implementation of the agreement, the composition on the EP side thereof should be in line with that of the Cariforum-EU Joint Parliamentary Committee;

- The comprehensive EPA should include a revision clause and a global impact assessment, which should be carried out within three to five years after the signature of the agreement in order to determine the socio-economic impact of the agreement, including the costs and consequences of implementation;

- To present to Parliament a report on specific aspects of the Pacific States fisheries sector as detailed above.

for the Committee on International Trade

on the draft Council decision on the conclusion of the Interim Partnership Agreement between the European Community, of the one part, and the Pacific States, of the other part
(05078/2010 – C7‑0036/2010 – 2008/0250(NLE))Rapporteur: Carmen Fraga Estévez

SHORT JUSTIFICATION

1. Substance of the proposal

On 23 November 2007 the European Commission and the countries of Papua New Guinea and Fiji concluded a new interim agreement which enabled the Pacific States to start benefiting from the improved access to the European market offered by the EU in the context of negotiations towards an economic partnership agreement (EPA). At the same time, the agreement sought to avoid disrupting trade between the Pacific States and the EU on the expiry, on 31 December 2007, of the trade preferences granted under the Cotonou Agreement, pending the conclusion of a comprehensive EPA.

Under this agreement, which has been provisionally implemented since 1 January 2008, customs duties on all products from a Pacific State, except for a few very limited exceptions, have been abolished, including those on all fishery products.

The agreement includes, in an annex, the rules governing the origin of raw materials, in this case live fisheries products that are fished by the vessels of the countries concerned outside their territorial waters. The rules set out a number of criteria (country of registration, flag state, ownership of the vessel) so that a sufficient link can be established between the vessels and the countries benefiting from the preferences.

The definition of the origin of processed fish products, including that of canned fish falling under HS (Harmonised System) code 1604, is subject to the conditions for the sufficient processing of raw materials set out in a list annexed to the protocol, which sets a limit of 15% on the use of non-originating raw materials when establishing the origin of the finished products.

An exception to this rule, however, allows a Pacific State to obtain ‘originating product’ status, and hence access to the EU market totally exempt from customs duties, for HS 1604 products that are manufactured on production sites located on the territory of that State from non-originating raw materials that have been landed in a port of that State. Countries wishing to benefit from this exemption therefore have to notify the Commission that they have insufficient raw materials to meet the demand from their processing plants, i.e. their vessels cannot catch enough fish to meet the supply needs of their processing industries.

This means that the processing industries of countries accorded preference under the agreement can export to the EU, free of duties, processed fish products caught either by vessels from third countries or in third countries that that have not been granted any tariff preferences by the EU.

2. Rapporteur's comments

Your rapporteur would first like to stress the EU fisheries sector’s great dissatisfaction with, and frustration at, this state of affairs and highlight the substantially adverse impact of this agreement on the industry, especially the tuna canning sector, owing to the totally outrageous exemption from the normal rules of origin that has been included in this agreement.

The main aim of the preferential rules of origin is to establish the existence of a sufficient economic link between the products imported into the EU and the countries benefiting from the preferences granted by the latter, in order to ensure that those preferences are not wrongfully diverted to other countries for which they were not intended. The agreement, however, does the contrary.

With regard to a product with as little value added as canned tuna, all autonomous preferential agreements and regimes applied by the EU have hitherto always stipulated that finished products could only be deemed to be originating products if most of the raw material used was itself originating, i.e. from fishing carried out by vessels having a sufficient connection to the beneficiary country.

The derogation granted to the Pacific States, which is being actively used by Papua New Guinea, has made this country into a genuine hub for the processing of huge quantities of tuna from a variety of sources (Philippines, Thailand, China, United States, Australia, etc.), which is landed in its ports and processed in factories that have been hastily set up by operators from the countries concerned for the sole purpose of benefiting from the total customs duty exemption granted by the EU under this interim agreement (direct exports from those countries are, meanwhile, subject either to a 24% MFN duty or to a duty that has simply been reduced under the GSP).

What is more, given that most of these countries are direct competitors of EU producers, the scale of this phenomenon has caused considerable disruption to the canned tuna market and constitutes totally unfair competition for a European processing sector that is already at an economic disadvantage owing to much higher labour costs and much tighter environmental and health and hygiene constraints, to the extent that thousands of jobs in this sector are currently at serious risk. It is also causing serious harm to other ACP or GSP beneficiary countries which, not having been granted similar derogations, can only count on their own raw materials for the operation of their processing industries.

The justification often cited by the Commission that this is development aid for a Pacific State consisting of a measure to encourage investment in that state does not really hold water when one notes that the factories built locally to take advantage of the ‘windfall’ derogation from the rules of origin have been equipped in a totally rudimentary fashion, employ mostly Asian staff brought in from other countries in the region rather than local workers, pay pathetic wages and are suspected of having a negative environmental impact.

Without disputing the merits that the Interim Partnership Agreement with the Pacific States might have in other respects, the Committee on Fisheries wishes, therefore, to draw the attention of the Committee on International Trade, which is responsible for proposing the approval of this agreement by Parliament, to the harmful, inappropriate nature of the derogation provided for in Article 6(6) of Protocol II on the Rules of Origin.

Your rapporteur welcomes the Commission's repeated assurances that no further derogations of this kind will be granted under any other preferential partnership with the EU, and considers that such assurances could be seen as the recognition that a mistake was made; she is therefore confident that – although it is too late to repair the damage inflicted on the fisheries sector during the interim application period – the situation will be resolved as soon as possible.

******

The Committee on Fisheries calls on the Committee on International Trade, as the committee responsible, to propose that Parliament approve the conclusion of the agreement and to incorporate the following paragraphs into its motion for a legislative resolution:

1. Insists that the exceptional arrangements regarding the rules of origin for processed fishery products laid down in Article 6(6) of Protocol II annexed to the Interim Partnership Agreement between the European Community, of the one part, and the Pacific States, of the other part, be suspended after the consultations provided for in subparagraph (d) of that paragraph;

2. Calls on the Commission to ensure that no further such derogation from the rules of origin for processed fishery products appears in the final partnership agreement with the Pacific States, which is still being negotiated.

RESULT OF FINAL VOTE IN COMMITTEE

Date adopted

Result of final vote

+:

–:

0:

Members present for the final vote

Josefa Andrés Barea, Antonello Antinoro, Kriton Arsenis, Alain Cadec, João Ferreira, Carmen Fraga Estévez, Pat the Cope Gallagher, Marek Józef Gróbarczyk, Carl Haglund, Iliana Malinova Iotova, Werner Kuhn, Isabella Lövin, Gabriel Mato Adrover, Guido Milana, Maria do Céu Patrão Neves, Britta Reimers, Crescenzio Rivellini, Ulrike Rodust, Struan Stevenson, Catherine Trautmann, Jarosław Leszek Wałęsa

Substitute(s) present for the final vote

Diane Dodds

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