EU levies tariffs on local rice

Sok Chan / Khmer Times No Comments Share:
Nearly $200 in tax will be levied per tonne in the first year, followed by $171 in the second and $142 in the third. KT/Chor Sokunthea

The European Commission has imposed tariffs on rice imports from Cambodia and Myanmar that, it says, are hurting farmers in the European Union.

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In a press release on Wednesday, the EC said that a significant increase in shipments of Indica rice from Cambodia and Myanmar into the EU caused economic damage to producers in the European block.

“Therefore, the EU commission has decided to re-introduce import duties that will be steadily reduced over a period of three years,” it said.

During the first year, 175 euros ($199.5) per tonne will be levied, 150 euros ($171) in the second year, and 125 euros ($142.5) in the last.

During an investigation last year launched at the behest of Spain and Italy, the EC found that imports of Indica rice from both countries increased by 89 percent in the past five rice-growing seasons, the statement noted.

It said the investigation found that rice prices from these countries were substantially lower than those in the EU market, and had decreased over the same period.

The surge in low-priced imports caused serious difficulties for EU rice producers to the extent that their market share in the EU dropped from 61 percent to 29 percent, the statement read.

Cambodia Rice Federation (CRF) vice president Hun Lak told Khmer Times that the re-imposition of tariffs creates a need for internal reform. Local firms must lower production costs in order to remain competitive in the European market, he explained.

“It was a mistake not to prepare for this while we still enjoyed duty-free access to the EU.

“Trade is like that: when one country believes its people are getting hurt, it would do what it is needed to prevent that damage. Now we have to focus on internal reform, and lowering production costs,” Mr Lak said.

Chan Sokheang, chairman and CEO Signatures of Asia, stressed that the tariffs will hurt Cambodian rice millers and exporters.

A man uses a forklift to move sacks of rice in a local warehouse. Supplied

“This is not good for Cambodia. What the EU wrote in their press release about their investigation is not correct,” Mr Sokheang said, adding that he does not know the exact date the levies come into effect.

He said that many exporters have had to cancel shipments. “Some buyers are asking us to hold shipments, others are asking to split to the cost of the tax, while others just want to end the contract.”

However, he also said, “We thank the EU for helping us for many years. We will continue the dialogue to see how to move forward.”

A press conference by the Ministry of Commerce on the issue was cancelled yesterday, with the ministry’s spokesman, Seang Thay, saying that they need more time to review a 60-page document submitted by the EU. He said the press conference will be re-scheduled for today.

Yesterday also the government issued a press release drawing attention to confusion among media professionals who are treating the tariffs and the Everything-but-arms (EBA) withdrawal as the same issue.

“The Royal Government has provided clarifications many times regarding the improvement of our dialogue on the EBA issue. With a strong partnership and mutual respect, and taking into consideration the changing situation and the income of the Cambodian people, this dialogue will be continued for one more year,” the statement noted.

“The Royal Government of this sovereign nation would like to call upon all stakeholders to maintain their dignity and professionalism and abstain from producing fake news leading the public to confusion.”

Last year, Cambodia exported 626,225 tonnes of rice to international markets, a drop of 1.5 percent compared to 2017.

Cambodian rice exports in 2017 represented 1.6 percent of global rice exports, World’s Top Exports research portal showed. That year Cambodia was the ninth biggest exporter in the world, while Myanmar held the tenth spot.

Local firms exported mainly three types of rice: fragrant rice (493,597 tonnes shipped, or 78.82 percent of total rice exports), long-grain white rice (105,990 tonnes, or 16.93 percent), and long-grain parboiled rice (26,638 tonnes, or 4.25 percent).

The largest market for Cambodian rice continues to be the EU, which imported almost 270,000 tonnes, equivalent to 42.98 percent of total exports.

By individual country, the largest buyer was China (170,000 tonnes), followed by France (90,000 tonnes), Malaysia (40,000 tonnes), Gabon (30,000 tonnes), and the Netherlands (26,000 tonnes).

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