WORLD TRADE SITUATION AND POLICY UPDATES
Industry concerned over continued access to Korea's citrus market
Recent developments in Korea have served to heighten concern among the California citrus industry over the possible introduction of new trade restrictions by the Korean government. ROK officials and the Korean media have cited various pests (i.e., California red scale, Medfly, oriental fruit fly) and alleged food safety concerns (pesticide residues) in calling into question the safety of California oranges. The pest-related issues are being reviewed by the two countries respective experts while the pesticide residue issues are being pursued with Korea's Ministry of Health and Welfare.
Korea had established an import quota mechanism for oranges, as provided under the Uruguay Round, in 1995. Since then, it has sourced essentially all of its orange imports from the United States, primarily California. U.S. orange exports to Korea in CY1996 were valued at $14.2 million, up from $5.3 million in the preceding year. Beginning July 1, 1997, out-of-quota imports at a higher tariff rate were permitted by the ROKG for the first time, a development that, barring the introduction of new trade barriers, is expected to lead to a significant increase in U.S. sales over the next several years.
First Florida tomatoes arrive in Japan after inspection delay
The first shipment of Florida tomatoes arrived in Japan in early November, an 18-ton container. This shipment followed the first successful shipments from California earlier in the year, following Japan's decision to allow in a limited number of U.S. tomato varieties after many years of negotiations. However, MAFF unexpectedly instituted a 100 percent sampling regime for Florida tomatoes, due ostensibly to concerns over the possible transmission of Caribbean fruit fly. Following a meeting with APHIS and FAS officials in Tokyo on Monday, November 10, MAFF agreed to exempt Florida tomatoes which are packed in the early stages of ripeness from the rigorous Caribfly inspection requirement. Further complicating the issue was a shipping delay in California, which contributed a quality degradation. A second shipment is en route and is expected to arrive in better condition.
Australia's new S.P.S. risk assessment system likely to further delay market access for U.S. products
Australia's quarantine inspection agency, AQIS, has unveiled a new procedure for conducting risk assessments on prospective plant and animal import products which appears likely to further delay market access for U.S. exports. Along with the addition of new personnel to carry out the assessments, the new review and decision making process is being billed as more transparent and objective when compared to the previous system. The process for completing a review will apparently take at least 9-14 months, depending on the complexity of the issue, and assuming there are no significant problems or stakeholder objections encountered along the way.
The Australian action represents a potentially significant setback for a number of pending horticultural access issues, particularly Florida grapefruit, table grapes, and almonds. The U.S. side has been working on these three issues for a number of years and, from a science-based perspective, considers all three as being at the resolution stage. Australia's highly restrictive pest risk analysis policy was identified in USTR's October 1 Super 301 announcement as a problem that was "being given special attention
by the Administration," and one that "may warrant enforcement action in the future" if not resolved satisfactorily. Australia continues to maintain phytosanitary-based import bans on a number of U.S. horticultural commodities, including Florida grapefruit, table grapes, stone fruit, apples, pears, blueberries, and papaya. Industry estimates place the value of annual lost sales resulting from these restrictions in the range of $50 million.
China cuts duties on a wide range of horticultural products
China has reduced import duties on a range of agricultural commodities, including many horticultural products, effective October 1, 1997. For example, the duties on most fresh vegetable items were reduced from 22 percent ad valorem to 13 percent. Duties on tree nuts and fresh fruits, which had generally ranged from 48-55 percent, were cut in most cases to 30 percent, an exception being oranges, where the duty was lowered to 45 percent. The duty cuts not withstanding, it should be noted that China continues to ban the importation of most U.S. fruits on phytosanitary grounds, the current exceptions being Washington State cherries, Pacific Northwest apples, and table grapes from five California counties.
Tariffs on processed vegetables were in most cases reduced from 45 percent to 25 percent, while most processed fruit product duties were cut from 45 percent to 30 percent. Tariffs on juices generally fell from 55 percent to 35 percent. However, China chose to leave the duties on wine and beer unchanged at 70 percent.
While a positive development, the reduced duties, together with China's VAT, will continue to function as a formidable constraint for most products. The ongoing WTO accession negotiations provide an opportunity to secure deeper cuts in China's duty rates on agricultural products. The following table provides more detailed information on the October 1 duty reductions.