[giovanni anania, university of calabria, italy – europes strategy for the outermost regions...
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[Giovanni Anania, University of Calabria, Italy – Europe’s Strategy for the Outermost Regions (Brussels, 14-15 May 2008) 1
The Expected Market Impact of the The Expected Market Impact of the Reform of the EU Domestic Policy Reform of the EU Domestic Policy Regime for Bananas and of the Interim Regime for Bananas and of the Interim Economic Partnership Agreements Economic Partnership Agreements
Giovanni AnaniaDepartment of Economics and Statistics University of Calabria, Italy
The Future of Europe’s Strategy for the Outermost Regions
[Giovanni Anania, University of Calabria, Italy – Europe’s Strategy for the Outermost Regions (Brussels, 14-15 May 2008) 2
the reform of the EU domestic policy regime
the pre-2007 regime provided generous, fully “coupled” support (deficiency payments)
the December 2006 reform canceled the previous regime: - support (278.8 million €) for banana producers in EU “Outermost Regions” (Canary Islands; Guadalupe & Martinique; Azores and Madeira) has been added to the financial allocation for the “POSEI programmes”- support (4.6 million €) for banana producers in Greece, Cyprus and continental Portugal has been “decoupled”
[Giovanni Anania, University of Calabria, Italy – Europe’s Strategy for the Outermost Regions (Brussels, 14-15 May 2008) 3
the reform of the EU domestic policy regime
the implementation in the POSEI programmes (2007)
(a) in Spain financial resources have been devoted to “decoupled” payments (and to a specific aid for open air banana production of 1,200 €/ha, paid on maximum 7,600 ha). “Decoupled” payments to individual farms are based on the support each of them received in the past; in order to receive the entire payment they are entitled to, farms are required to produce at least 70% of what they produced, on average, in 2000-2005
[Giovanni Anania, University of Calabria, Italy – Europe’s Strategy for the Outermost Regions (Brussels, 14-15 May 2008) 4
the reform of the EU domestic policy regime
(c) in Portugal (Azores and Maderira) financial resources are used to provide banana producers with a fixed, fully “coupled” production subsidy
(b) in France financial resources have been entirely devoted to “decoupled” payments. “Decoupled” payments to individual farms are based on the support each of them received in the past; in order to receive the entire payment they are entitled to, farms are required to produce at least 80% of what they produced, on average, in 2001-2005
[Giovanni Anania, University of Calabria, Italy – Europe’s Strategy for the Outermost Regions (Brussels, 14-15 May 2008) 5
the reform of the EU domestic policy regime
a strong reduction in banana production in Canary Islands, Guadalupe and Martinique [the “decoupled” payments are around 11,700 €/ha; farms will find profitable to produce 70% (Canary Islands) and 80% (Guadaloupe and Martinique) of what they produced in the reference periods, but no much more than that]
the expected impact:
an increase in imports (increases by individual sources depend on the trade policy regime in place)
[Giovanni Anania, University of Calabria, Italy – Europe’s Strategy for the Outermost Regions (Brussels, 14-15 May 2008) 6
the reform of the EU domestic policy regime
Expected impact of the 2006 reform of the EU Common Market Organization for Bananas (2013; no EPA; no policy change = 100).
EU prod Canary Isl Mar & Gua Azo & Mad Gre & Cyp EU consum EU price40
50
60
70
80
90
100
110
120
130
140
No policy change CMO reform
CMO reform 80,5 76,3 82,7 120,2 100,6 99,9 100,3
[Giovanni Anania, University of Calabria, Italy – Europe’s Strategy for the Outermost Regions (Brussels, 14-15 May 2008) 7
the reform of the EU domestic policy regime
Expected impact of the 2006 reform of the EU Common Market Organization for Bananas (2013; no EPA; no policy change = 100).
EU imports from ACP from MFN40
50
60
70
80
90
100
110
120
No policy change CMO reform
CMO reform 103,1 100,7 103,7
[Giovanni Anania, University of Calabria, Italy – Europe’s Strategy for the Outermost Regions (Brussels, 14-15 May 2008) 8
what if… countries modify their choices within the POSEI programmes?
the EU domestic policy regime, what if…?
what if… France, Spain and Portugal decide to keep unchanged the amount of support they provide to banana producers but make it fully decoupled?
a further reduction in banana production (of an order of magnitude of an additional -30-35%)an increase in farm incomes
a further increase in imports
[Giovanni Anania, University of Calabria, Italy – Europe’s Strategy for the Outermost Regions (Brussels, 14-15 May 2008) 9
the “interim” EPA
on 1 January 2008 the EU implemented the trade arrangements under the “interim” and full Economic Partnership Agreements with many ACP countries
bananas from ACP countries now enter the EU (except the Outermost Regions, at least until 1.1.2018) quota- and duty-free
[Giovanni Anania, University of Calabria, Italy – Europe’s Strategy for the Outermost Regions (Brussels, 14-15 May 2008) 10
the “interim” EPA
an increase in EU imports from ACP countries
the expected impact:
very little impact on EU domestic production
a reduction in EU imports from MFN and LDC countries
an increase in EU consumption
increased market accesschange in relative competitiveness of suppliers on the EU market
[Giovanni Anania, University of Calabria, Italy – Europe’s Strategy for the Outermost Regions (Brussels, 14-15 May 2008) 11
the “interim” EPA
Expected impact of the 2006 reform of the EU Common Market Organization for Bananas (2013; no EPA; no policy change = 100).
EU prod Canary Isl Mar & Gua Azo & Mad Gre & Cyp EU consum EU price40
60
80
100
120
140
No policy change CMO reform EPA
CMO reform 80,5 76,3 82,7 120,2 100,6 99,9 100,3
EPA 80,4 76,3 82,7 119,4 97,7 100,5 98,9
[Giovanni Anania, University of Calabria, Italy – Europe’s Strategy for the Outermost Regions (Brussels, 14-15 May 2008) 12
the “interim” EPA
Expected impact of the 2006 reform of the EU Common Market Organization for Bananas (2013; no EPA; no policy change = 100).
EU imports from ACP from MFN40
90
140
190
No policy change CMO reform EPA
CMO reform 103,1 100,7 103,7
EPA 103,9 181,8 85,9
[Giovanni Anania, University of Calabria, Italy – Europe’s Strategy for the Outermost Regions (Brussels, 14-15 May 2008) 13
…models vs. reality
some of the issues associated with the assumptions made in the modeling exercise:
quality of data available
perfectly competitive markets
bananas as an homogeneous product
perfectly elastic transportation servicessupply response to policy and price changes in each countrydemand response to changes in incomes and prices in each country
[Giovanni Anania, University of Calabria, Italy – Europe’s Strategy for the Outermost Regions (Brussels, 14-15 May 2008) 14
conclusions
the December 2006 reform of the EU domestic policy regime for bananas reduced the distortions in domestic production decisions and will bring a significant decline in EU domestic production of bananas and an equally significant increase in EU imports
[Giovanni Anania, University of Calabria, Italy – Europe’s Strategy for the Outermost Regions (Brussels, 14-15 May 2008) 15
conclusions
the “interim” EPA will not significantly change EU domestic production and imports of bananas but the preference it grants to ACP countries will affect the relative competitiveness of their exports to the EU (expected to increase by 80%) vs. those of MFN countries (expected to decline by 7%)
[Giovanni Anania, University of Calabria, Italy – Europe’s Strategy for the Outermost Regions (Brussels, 14-15 May 2008) 16
Thank you!