The European Union yesterday failed to come to a consensus on taxing Cambodia fragrant and white rice, giving leaders of the local rice sector more time to plan the next step in their fight to stop the EU from imposing tariffs.
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Yesterday’s vote, hailed as a positive sign for Cambodia, failed to deliver a decision on the regressive rice tariff imposition that is expected to start from Jan 1 next year, with 15 of 28 member states either rejecting the proposal or abstaining from the vote.
13 nations voted in favour of the activation of the clause that would enable the tariffs, including Spain and Italy, the countries that allegedly prompted a revision of the rice trade with Cambodia when they complained of price imbalances impacting their rice farmers.
The European Commission (EC)’s Directorate-General of Agriculture and Rural Development noted that the vote might provoke some further discussion within the Commission but “the assumption should still be that this proposal will be adopted”.
As a result, EC has been tasked with making a final decision before the January deadline. The tax imposition amounts to 175 euros per tonne in the first year, 150 euros in the second year, and 125 euros the following year.
But this uncertainty means that Cambodia gets more time to continue lobbying the EU, said Cambodia Rice Federation (CRF) vice president Hun Lak.
“We will work with the Ministry of Commerce and other relevant stakeholders to lobby our case because it is not clear now,” he told Khmer Times over the telephone.
“It was a positive result as the vote to impose tariffs on Cambodia rice exports did not win a majority, with some countries against the proposal. The countries that rejected it obviously feel that there will be an impact on the livelihood of the farmers.
“It would also impact EU’s effort to alleviate poverty in least developed, and developing countries. In addition, the tariffs would affect EU importers and its own consumers,” he added.
The EC launched a safeguard investigation in March to see if the volume with or without prices of imports of semi-milled and milled Indica rice from Cambodia and Myanmar resulted in serious difficulties to EU producers of similar or competing products.
Czech Republic, Denmark, Estonia, Finland, Luxembourg, Netherlands, Sweden and the United Kingdom voted against the proposal.
In contrast, Belgium, Bulgaria, Cyprus, France, Greece, Hungary, Ireland, Italy, Portugal, Poland, Romania, Slovakia and Spain supported it, while Austria, Croatia, Germany, Lithuania, Luxembourg, Malta and Slovenia remained neutral.
In the meantime, the EC has included a “shipping clause,” stating that imports already on the way to the EU on the date the regulation comes into effect (Jan 1, 2019) shall not be subject to duties specified in the law, provided that the destination of such products cannot be changed.
“The date of entry into force will be the day after the publication of the regulation. The timing of publication, for the time being, should be assumed to be as previously indicated, namely early January,” it added.
Mr Lak opined that everything will continue as planned as CRF seeks support from the EU Embassy in Cambodia to urge EC to refrain from imposing the rice tax.
“We have not done anything wrong and we have enough evidence to show the impact that could be caused by the tax,” he said.
However, he added that if EC carries on with the tax, CRF would begin the second phase of engagement: to negotiate the reduction of the regime to 120 euros or less.
Pen Sovicheat, director-general of the domestic trade department at the Ministry of Commerce, told Khmer Times that Cambodia’s stand against the proposal is based on the skills of the farmers and fair competition, and that Cambodia’s rice does not affect Italy and Spain’s rice farmers.
“It is unfair to punish our farmers. We have explained in detail the technical aspects of the issue to the EU. The ball is now in EC’s court as yesterday’s vote due to the differing views among the member states. So, we will wait and see what the next measures are,” he said.
He added that the government has expressed their views to countries like Germany and the UK, who understand that Cambodian rice is different.
“But if the EU still wants to tax us we have the Chinese market and other markets that recognise our rice,” Mr Sovicheat said.
According to the Secretariat of One Window Service for Rice Export, from January to September, nearly half of all Cambodian rice exports went to the EU, 193,499 tonnes out of a total of 389,264.