EFTA-SACU Trade in Agricultural Products

EFTA-SACU

Trade in Agricultural ProductsWilly [email protected] Consultant, Berne

OutlineAgriculture policy in the EFTA StatesEFTA imports of agricultural goodsAgriculture goods covered in the SACU EFTA FTA (and the WTO)Useful information linksExamples of exports to the EFTA States

Agriculture in the EFTA States1 % of GDP and 4 % of employment Difficult climatic and geographical conditionsKey employer in rural areasSmall scale structure agricultureHigh production costs High SPS standards

Main agricultural productionsIcelandBovine and sheep, especially tender highland lamb of high qualityIcelandic horsesNorwayMeat and dairyGrain and some vegetablesSwitzerlandMeat, dairy, fruit and wineFamous cheese

Agricultural policy in the EFTA StatesNot a common agricultural policy, but similarActive policy to maintain a certain level of agricultural production High tariffs on goods from sensitive sectors; meat and dairyNot self-sufficient, large net-importers of agricultural products (Import ca. 50 % of consumption)

EFTA imports of agricultural goodsMajor net-importers of agricultural goodsMain trading partner is the European Union (ca. 70%)Major product groups that are imported from SACU: Fruits and nutsBeverages MeatProcessed agricultural products

EFTA trade with agricultural goods

Chart1

7.845683.36574

9.5108733.843146

10.5249934.446849

12.2039065.374565

14.8171516.741128

17.8015638.374437

IMPORT

EXPORT

Billion US dollar

Imp 2006-2008

Reporting Countries Import Statistics (Partner Country: World)

UDG: EFTA Agricultural Products, HS 01-24, excluding 03

Calendar Year: 2006 - 2008

Reporting CountryThousands United States Dollars% Change 2008/2007Data Availability

200620072008

Reporting Total12203906148171511780156320.1401/97 - 05/09

Switzerland770103490568681084716519.7701/96 - 05/09

Norway41827065360966652145621.6501/97 - 05/09

Iceland3201663993184329418.4201/97 - 05/09


UDG: Fish,



200620072008

Reporting Total1021113123406712875874.3401/97 - 05/09

Switzerland5137135793256363369.8401/96 - 05/09

Norway438588571676570376-0.2301/97 - 05/09

Iceland688128306780874-2.6401/97 - 05/09

Agricultural products, including fish.


Reporting CountryThousands United States Dollars

200620072008

EFTA Total132250191605121819089150

Switzerland8214747963619311483501

Norway462129459326427091832

Iceland388978482385513815

Reporting Countries Import Statistics (Partner Country: EU-27)




200620072008

Reporting Total9026767108188611306367820.7501/97 - 05/09

Switzerland59751426961107842194220.9901/96 - 05/09

Norway28391523592171435922321.3501/97 - 05/09

Iceland2124722655842825136.3701/97 - 05/09


UDG: Fish,



200620072008

Reporting Total48693754731961603412.5501/97 - 05/09

Switzerland31034135392339476311.5401/96 - 05/09

Norway15332116877320619522.1701/97 - 05/09

Iceland232752462215076-38.7701/97 - 05/09




200620072008

Reporting Total95137041136618013679712

Switzerland628548373150308816705

Norway299247337609444565418

Iceland235747290206297589

Imp 2002-2004





200220032004

Reporting Total784568095108731052499310.6601/97 - 05/09

Switzerland5245675632485868590598.4501/96 - 05/09

Norway24139902961169339910114.7901/97 - 05/09

Iceland18601622484726683418.6701/97 - 05/09


UDG: Fish,



200220032004

Reporting Total83563479275692908817.201/97 - 05/09

Switzerland34937539686044170711.301/96 - 05/09

Norway42359133656140184719.401/97 - 05/09

Iceland62669593358553444.1501/97 - 05/09

World: Agricultural products, including fish.



200220032004

Reporting Total86813141030362911454081

Switzerland559505067217187300766

Norway283758132977303800948

Iceland248685284182352368





200220032004

Reporting Total58011307126080789304810.7601/97 - 05/09

Switzerland4054467495007853689958.4601/96 - 05/09

Norway16217942020635234477216.0401/97 - 05/09

Iceland12486915536717928115.3901/97 - 05/09


UDG: Fish,



200220032004

Reporting Total39649240626947420716.7201/97 - 05/09

Switzerland2153852502252730099.1101/96 - 05/09

Norway16458914017416853720.2301/97 - 05/09

Iceland165181587132661105.801/97 - 05/09

EU - 27: Agricultural products, including fish.



200220032004

Reporting Total619762275323498367255

Switzerland426985252003035642004

Norway178638321608092513309

Iceland141387171238211942

Ex 2006-2008

Reporting Countries Export Statistics (Partner Country: World)




200620072008

Reporting Total53745656741128837443724.2301/97 - 05/09

Switzerland42051815402810698326729.2501/96 - 05/09

Norway834459956201106484611.3601/97 - 05/09

Iceland334925382117326323-14.601/97 - 05/09

Reporting Countries Export Statistics (Partner Country: World)Reporting Countries Export Statistics (Partner Country: World)

UDG: Fish,UDG: Fish,

Calendar Year: 2006 - 2008Calendar Year: 2006 - 2008

Reporting CountryThousands United States Dollars% Change 2008/2007Data AvailabilityReporting CountryThousands United States Dollars% Change 2008/2007Data Availability

200620072008200620072008

Reporting Total7003991791236883937156.0801/97 - 05/09Reporting Total7003991791236883937156.0801/97 - 05/09

Switzerland5883803587158.4601/96 - 05/09Norway5372247610888366364248.6401/97 - 05/09

Norway5372247610888366364248.6401/97 - 05/09Iceland162586117954501748575-2.6101/97 - 05/09

Iceland162586117954501748575-2.6101/97 - 05/09Switzerland5883803587158.4601/96 - 05/09




200620072008

Reporting Total123785561465349616768152

Switzerland421106454108456991982

Norway620670670650847701270

Iceland196078621775672074898

Reporting Countries Export Statistics (Partner Country: EU-27)




200620072008

Reporting Total38273264777055543243913.7201/97 - 05/09

Switzerland29829753819450451378518.1801/96 - 05/09

Norway6234107137937758408.6901/97 - 05/09

Iceland220941243812142814-41.4201/97 - 05/09

Reporting Countries Export Statistics (Partner Country: EU-27)Reporting Countries Export Statistics (Partner Country: EU-27)




200620072008200620072008



Norway3458342380935240118235.3201/97 - 05/09Iceland123352313856361327075-4.2301/97 - 05/09

Iceland123352313856361327075-4.2301/97 - 05/09Switzerland4475581262287.1601/96 - 05/09




200620072008

Reporting Total8523665997785510777565

Switzerland298745038252624520013

Norway408175245231454787663

Iceland145446416294481469889

Percentage agr.

Percentage fish55%52%50%

Ex 2002-2004





200220032004

Reporting Total33657403843146444684915.7101/97 - 05/09

Switzerland22782732705317323573019.6101/96 - 05/09

Norway6798307088317737079.1501/97 - 05/09

Iceland4076364289984374111.9601/97 - 05/09

Reporting Countries Export Statistics (Partner Country: World)Reporting Countries Export Statistics (Partner Country: World)




200220032004200220032004



Norway34556483538047405255414.5401/97 - 05/09Iceland11815001277696154098620.6101/97 - 05/09

Iceland11815001277696154098620.6101/97 - 05/09Switzerland28623459482939.5801/96 - 05/09




200220032004

Reporting Total8005750866234810045218

Switzerland228113527087763240559

Norway413547842468784826261

Iceland158913617066941978397

Reporting Countries Export Statistics (Partner Country: EU-27)




200220032004

Reporting Total23944972769770315074313.7501/97 - 05/09

Switzerland15868461911191224611817.5201/96 - 05/09

Norway5020755247205688308.4101/97 - 05/09

Iceland3055763338593357950.5801/97 - 05/09

Reporting Countries Export Statistics (Partner Country: EU-27)Reporting Countries Export Statistics (Partner Country: EU-27)




200220032004200220032004



Norway19899342174576245891313.0801/97 - 05/09Iceland824889948972115565121.7801/97 - 05/09

Iceland824889948972115565121.7801/97 - 05/09Switzerland18131970339472.3201/96 - 05/09




200220032004

Reporting Total521113458952886768702

Switzerland158865919131612249512

Norway249200926992963027743

Iceland113046512828311491446

Figur excl fish




Reporting CountryThousands United States DollarsThousands United States Dollars

200220032004200620072008

Reporting Total7845680951087310524993122039061481715117801563

Switzerland5245675632485868590597701034905686810847165

Norway241399029611693399101418270653609666521456

Iceland186016224847266834320166399318432941




Reporting CountryThousands United States DollarsThousands United States Dollars

200220032004200620072008

Reporting Total336574038431464446849537456567411288374437

Switzerland227827327053173235730420518154028106983267

Norway6798307088317737078344599562011064846

Iceland407636428998437411334925382117326323

200220032004200620072008

IMPORT7845680951087310524993122039061481715117801563

EXPORT336574038431464446849537456567411288374437

Billion US dollar

200220032004200620072008

IMPORT7.89.510.512.214.817.8

EXPORT3.43.84.45.46.78.4

Figur excl fish

IMPORT

EXPORT

Billion US dollar

Figur incl fish

IMPORTS



200220032004200620072008

Reporting Total86813141030362911454081132250191605121819089150

Switzerland5595050672171873007668214747963619311483501

Norway283758132977303800948462129459326427091832

Iceland248685284182352368388978482385513815



200220032004200620072008

Reporting Total61976227532349836725595137041136618013679712

Switzerland426985252003035642004628548373150308816705

Norway178638321608092513309299247337609444565418

Iceland141387171238211942235747290206297589

EXPORTS



200220032004200620072008

Reporting Total8005750866234810045218123785561465349616768152

Switzerland228113527087763240559421106454108456991982

Norway413547842468784826261620670670650847701270

Iceland158913617066941978397196078621775672074898



200220032004200620072008

Reporting Total5211134589528867687028523665997785510777565

Switzerland158865919131612249512298745038252624520013

Norway249200926992963027743408175245231454787663

Iceland113046512828311491446145446416294481469889

TABLE, thousands

200220032004200620072008

IMPORT Total86813141030362911454081132250191605121819089150

IMPORT EU-2761976227532349836725595137041136618013679712

EU %71%73%73%72%71%72%

EXPORT Total8005750866234810045218123785561465349616768152

EXPORT EU-275211134589528867687028523665997785510777565

EU %65%68%67%69%68%64%

TABLE, billions

200220032004200620072008

IMPORT Total8.710.311.513.216.119.1

IMPORT EU-276.27.58.49.511.413.7

EXPORT Total8.08.710.012.414.716.8

EXPORT EU-275.25.96.88.510.010.8

Table only EFTA and World

200220032004200620072008

IMPORT8.710.311.513.216.119.1

EXPORT8.08.710.012.414.716.8

Figur incl fish

IMPORT

EXPORT

Billion US dollar

Framework for trade in agricultural goods between EFTA and SACU

WTO

EFTA - SACU Free Trade Agreement

Structure of the FTA

Agriculture in the SACU EFTA FTA

ARTICLE 1Establishment of a free trade area1. The Parties hereby establish a free trade area in accordance with the provisions of this Agreement, which is based on trade relations between market economies.

Agriculture in the SACU EFTA FTAARTICLE 6Scope (of trade in goods chapter)This Chapter shall apply to:(a) products falling within Chapters 25 to 98 of the Harmonized Commodity Description and Coding System (HS), except as provided for in Annex II;(b) products specified in Annex III, with due regard to the arrangements provided for in that Annex; and(c) fish and other marine products as provided for in Annex IV.

Agriculture in the SACU EFTA FTA Processed agricultural productsIncluded in the Main Free Trade Agreement in Annex III

Basic agricultural productsBilateral complementary agricultural agreements between each of the EFTA States and SACU

Annex III - Processed agricultural products Covers products like; bread, soups, chocolate, preserved fruits and vegetables, prefabricated food.EFTA offers SACU the same treatment as EFTA offers the EU for these productsNo industrial protection. Duty based on content of certain raw materials (mainly dairy and cereal products)

Bilateralagreements

Useful information linksThe SACU EFTA Free Trade Agreement (including Annex III) and the Bilateral Agricultural Agreements: http://efta.int/ Icelandic Customs tariff: www.tollur.isNorwegian Customs tariff:www.toll.no Swiss Customs tariff:www.tares.ch

Examples:Dried grapes (HS 08.06) into Switzerland:Basic product, bilateral agricultural agreementNatural honey (HS 04.09) into Switzerland:Basic product, bilateral agricultural agreementBeer (HS 22.03) into Iceland:Processed product, Annex IIIWine (HS 22.04) into Norway:Basic product, bilateral agricultural agreement

FreeFreeFree19 Fr./100 Kg(MFN = 38 Fr./100 Kg)

Questions ?Questions related to agriculture in the EFTA - SACU FTA: Willy Tinner, SECO [email protected] Eivind Skjulestad, EFTA Secretariat [email protected]

Thank you!

Present myself: Willy Tinner, after retirement working as Senior Consultant for the State Secretariat for Economic Affairs (SECO) in Berne.Before retirement as from 1st April 2008: Responsible in the SECO for international Trade in Goods (Industrial and agricultural, including processed agricultural products).I was a part of the negotiations of the FTA I have been at least two time in Pretoria.I will talk about how agriculture is included in the FTA Agreement. In general, agriculture seems to be the hot potato or the breaking point in Trade talks. Be it negotiations in the WTO (World Trade organization) or bilateral free trade agreements.However, EFTA and SACU were able to finalize an FTA including agriculture.I believe this was due to the fact that SACU and EFTA have complementary productions, mainly due to different climate and geographical positions, and especially different seasons.[As shown earlier today, the trade between EFTA and SACU has steadily increased since the FTA entered into force. However, it is clear that that SACU has several high quality products that you already are, or have potential to, export to the EFTA States.Be it from basic products like fruit and vegetables, to more refined products like wine.]I, together with my Colleagues, especially in tomorrows presentations, will try to show that there is a great potential for SACU export of agricultural products to the EFTA StatesI would like to give you a short overview of the topics I will cover in my presentation.First, I will give a short introduction to the agricultural production and policy in the EFTA States. Secondly, look into EFTAs import patterns and trade flows for agricultural products. This to see which products the EFTA States import, and what countries their current imports are coming from. Then, I will explain how agricultural goods are covered and treated in the EFTA-SACU Free Trade Agreement. Briefly touch upon how the WTO sets the overall framework for trade in agricultural goods.I have some useful links to information regarding the agreement.And finally, I hope we have some time for some practical examples, and possible questions.

Of course, there are many other aspects impacting exportation of products. I will mainly cover those that concern the import duties. [Topics like SPS and origin rules, that have been discussed earlier today.And not the least all the practical aspects of the actual sale, like contact persons, logistics, distributors and retailers. These areas will be covered in detail tomorrow.]

The EFTA States are maybe not most famous for their agricultural products. However their landscape; mountains, fjords and green fields, are closely linked to their agricultural production.The EFTA States have similar climatic and geographic conditions; short growing seasons and relatively cold temperatures. These conditions favors grass and livestock production and production of only certain fruits and vegetables.Needless to say, in addition to the general high cost level in the countries, the production costs are relatively high and the competition level is low for many products.The EFTA States are fairly small countries and markets, but the consumers are willing to pay relatively high prices for high quality products, which I know you have plenty of.In Iceland, the agricultural sector plays an important part especially in the rural areas.Bovine animals (milk and Meat) (48 %) and sheep meat ( 23%) are the main productionsEspecially Icelandic tender lamb meat is also famous outside their borders.I am not sure if you have them in SACU, but the Icelandic horses are also an famous Icelandic export article (but not for their meat)

Also for Norway, agriculture is a key sector for employment and settlement in most rural areas in Norway.Meat and dairy are the main production, and there are also produced grain and some vegetables and fruits. Environmental issues, organic farming and business development related to new products are also important areas for the Norwegian agricultural sector.

Switzerland is the largest, and also most well known, of the EFTA States. The main productions in Switzerland are in the dairy and meat sectors, and also grapes for cereals, wine, apples and also some other vegetables. Probably most famous for its cheeses.But, Switzerland is also famous for its food processing industry (chocolate), being the home country of Nestle.

The EFTA States do, unlike the EU, NOT have a common agricultural policy.The EFTA States have their separate customs duties, and separate agricultural policies which takes into the specific sensitivities of each EFTA State.All the EFTA States have active agricultural policies, where one of the goals are to maintain a certain level of agricultural production spread throughout the countries. Included in the Swiss constitution!STILL, the EFTA States are major net-importers of agricultural products, and import approximately 50 % of their consumption.As already mentioned, all the EFTA States are major net-importers of agricultural goods. Mainly due to historical and geographical proximity, the main trading partner is by far the EU, with around 70% of all agricultural imports to the EFTA States.However, I believe the kitchen in the EFTA States have increasingly opened their eyes on more exotic food over the last years, and you will for instance find restaurants with South American food in all the EFTA Countries.The agricultural products that are imported are of course somewhat dependent on what is already being produced in the EFTA country, and on the import duties you will have to pay for the importation of the different products.The main groups of imports from SACU are:Fruits and vegetables. The variety of fruits and vegetables that can be produced in the EFTA States are obviously limited. So these products represents a great part of the imports.The population is increasingly consuming more prefabricated food and some of this demand is being met by imports. This product group also generally represents high value products.There are also great imports of beverages (SACU and South America).Especially Norway is a large importer of meat from Namibia and Botswana.(Agricultural goods HS 01-24, excluding 03 fish)In 2008 the EFTA states imported agricultural goods for almost 18 billion US dollar As you can see, both imports and exports have doubled from 2002 to 2008. 2/3 of the imports come from the EU.World Trade OrganisationBilateral EFTA SACU deepens the bilateral relationship1+3 and not four, due to the customs union between Switzerland and Lichtenstein.These countries have the same regimes (the Swiss regime)!Now I would like to look into how agricultural products are included and treated in the SACU EFTA FTA.I gave a general overview of the Free Trade Agreement this morning. I will now, not surprisingly, focus on the part of the agreement that covers agriculture.First, I would like to draw your attention to the first article of the Free Trade Agreement. This article Establishes the free trade area between EFTA and SACU.

This implies that the free trade area is actually established by a set of agreements, as I briefly touch upon this morning.

Products in HS chapters 25 97. These are industrial goods, like machines and textilesProcessed agricultural goods. These are agricultural products that have gone through some kind of industrial processing.Fish

Harmonized Commodity Description and Coding System, or HS- an international classification system of all goods for trade purpose. It starts with chapter 1 live animals, ch2 dead animals (meat), fish, dairy products, vegetables, more processed products , chemicals, industrial goods 1-97

To summarize: Processed agricultural products are included in a Protocol to the Free Trade Agreement Annex IIIBasic agricultural products are covered in bilateral agricultural agreements.The reason for this structure with the bilateral agreements is that the EFTA States have different national agricultural policies and different import duties for agricultural goods. By having separate agreements each of the EFTA States are able to give SACU the best possible concessions they can into their country.Example; Norway and Iceland can offer duty free access for wine, while Switzerland can not. However, Switzerland might be able to give more concessions for meat than for instance Norway is able to.

However it is important to note that the bilateral agreements form together with the Main Free Trade Agreement, the instruments creating the Free Trade Area between SACU and EFTA.One of the agreements can not be implemented or terminated without the others. They are all a part of one package, strongly linked together.I would like to explain Annex III further:The Annex covers processed agricultural products like; bread, soups, chocolate, preserved fruits, vegetables and nuts and other prefabricated foods.For these products the EFTA States grant SACU the same treatment as EFTA offers the EU for these products.This means that SACU has the same preferential treatment as the EU, and compete on the same level as the EU.For these products the principal is that there is no duty protecting the processing industry. This duty is terminated. The only duty that is levied on these products are based on the actual content of the raw materials contained in the product. And there are only duties on the raw materials that are sensitive in the agricultural production in the respective EFTA State.For example, take chocolate exported to Norway. To make it simple, lets say chocolate is made of sugar, milk and cocoa. Sugar and cocoa are not sensitive products for Norway, so there is only a duty on the milk component of the chocolate.In general the main sensitive ingredients for the EFTA States are dairy products, meat, grain and some vegetables.Now we have come to the bilateral agricultural agreements.As explained earlier, these are three separate agreements between SACU and each of the EFTA States.Each of the agreements have separate list where the concessions are spelled out in detail. If you have a specific interest in a product look into the concession table for the respective countryEach agreement does also have their own annex with separate origin rules. These origin rules are however following the same principles as the origin rules in the main Free Trade agreements.I would also like to note that unless otherwise is stated in the agreement, the general rules applied under WTO are of course valid.

Now an example of a bilateral agreement, the agreement between SACU and Norway.First comes the text, concessions into SACU in Annex 1 and concessions into Norway in Annex 2Then comes the concessions spelled out in details (Positive list of concessions!!); HS number, Product description, the duty for SACUAt last are the specific origin rules.

When it comes to the links to the customs tariffs, I believe these are pretty self-explanatory. Just remember to push the English flag or text. You can of course also contact the customs authorities.To summarize my presentation, I would like to look at some examples of products to be exported to the EFTA States:

Dried grapes into SwitzerlandNatural honey into SwitzerlandBeer into IcelandWine into Norway

If you have any questions related to agricultural products in the SACU EFTA FTA, you can either ask me now, or contact me later today or by e-mail.

(Any questions?)(Since we have already used the time, I think it is better if we stop here and if you have any questions, I will be available after the presentation.)

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