US-EEC AGRICULTURAL TRADE: CASE HISTORY OF POULTRY

Created: 4/26/1963

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US-EEC AGRICULTURAL TRADE: CASE HISTORY OF POULTRY

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OS-EEC AGRICULTURAL TRADE: CASE HISTORY OF POULTRY

The Common Market countries individually have long had agricultural policies which are in varying degrees protectionist, but there is danger that the gradual merging of their farm policies under the EEC may result in an increase in the over-all level of protection. This would pose adjustment problems for US agriculture and increase US balance-of-payments difficulties. The recent drop in US poultry exports to Europe has alreadyarticular source of friction between the US and the EEC.

Agricultural Exports to EEC

Aboutercent,5 billion, of annual US exports are agricultural products. nd2 billion of these farm exports went to the Common Market area. 0 million of thesecotton, soybeans, hides, and certain fruits and vegetables, which are not produced in any volume within the EECEEC is adopting liberal trade policies. Prospects aregoodontinuing expansion of US exports of these conmodlties.

The0 millionxports to tbe EEC, however, represented products on which difficulties may arise, notably wheat and wheateednd poultry and7n wheat and other grains, tbe Common Market has not yet taken the key decisions which will determine whether the EEC's emerging Common Agricultrual Policyhich waslast July, will as a

whole be sore protectionist than the average of thenational policies of the Six.

us poultry K'pnrts

Prior to introduction of the CAP, total US exports of poultry meat had Increased rapidly much of the increase went to one EEC country. West Germany (see Because of various restrictions, the US was never able to crack the market in any significant degree in the other EEC nations. Even in Germany, most of the increase

in US exports occurred afterhen Bonn lifted dollar import restrictions.

The German tariff onof poultry meat wasents per pound prior to the introduction of the CAP. US poultry producers were able to surmount this tariff and take over anportion of the German market.

The modern breeding and feeding methods which have given US poultry producers aedge in recent years are just now beginning to take hold in Western Europe. As shown by the US example, these technological changes canvery rapidly. With or without increased protection under the CAP, the Common Market's domestic poultryis expected to become increasingly competitive with that of the US over the next few years.

Post-CAP Situation

After the CAP took effect, the total duties on each pound of US chicken imported into West Germany more than doubled and now are aboutents per pound. onsequence, US exports to West Germany have plummeted (see The drop resulted Initially from an abnormal build-up of poultry imports from the US prior to introduction of the CAP, In anticipation of the increase in duties. The continued low level of US exports in recent

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months, however, quite clearly indicates American poultry exporters, saddled by the higher duties, are being effectively squeezed out of the EEC market.

Strenuous US efforts for the past eight months toeduction in the CAP poultry levies have had little success. EEC farm Interests argue that the temporary US technological lead in poultry raising has given the US an unfair andshare of the West German market in recent years. It is also argued that there are millions of small farmers in the EECmore than in thepoultry is one of the few outlets they have forood income.

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French and Dutch poultry groups have alsoajor role in maintaining the EEC levies at present levels. (Seeor details of how BBC poultry import duties are determined, and asummary of EEC-USon poultry since)

Politicians vs. Technicians

The technical complexity of the EEC poultry levies is the source of another difficulty facing the US in negotiations with the Common Market on agriculture. Many of theleaders In the EEC countries have admitted that they do not understand or follow closely implementation of the details of the poultry and otherregulations. While discussing the EEC's agricultural policy with President Kennedy last November, Belgian Foreign Minister Spaak expressed the view that technicians had taken over the subject, and that it must be lifted back to the political level.

Spaak seemed to be implyir that the subject hasimplications andshould be solved at high levels of the governments involved. The protectionistinterests in most of theMarket countries, however, tend to be so strong on the domestic political scene that solutions to agricultural problems are often based too much,rather than too little, on "political" considerations. Athough Spaak's statementeneral disquiet among various EEC leaders about their lack of close control over experts in agriculture and other technical fields, this does not offer much hope for immediate solution of EEC-US agricultural

Recognizing that poultry exports have become anpolitical issue in the US, however, the EEC Commission has recently proposed varioua changes in the CAP poultry Import levies which would reduce the duties on West German Imports from aboutents per pound to aboutents. The EEC Council of Ministers, which must approve such changes in CAP regulations unanimously, refused to take action on oven this relatively moderate roductlon at its

RnurePOULTRY IMPORT LEVIES ARE DETERMINED

UNDER EEC'S COMMON AGRICULTURAL POLICY

Feed groinajor item of poultry production costs. Grain prices Id the EEC are supported at Levels higher than on the vorld Market, and thin results in higher prices on poultry produced within the BSC. StC poultry Import levies are intended to equalize this difference, and beyond this toegree of added protection for domestic

The SEC poultry import levies have two elements:

Af- which consistselatively low fixed tariff and aa equalization fee intended to Bake up the difference between grain prices in each EEC country and on the world market. This equalisation fee varies fron one ESC country to another and is recomputed every three months to take account of changing grain prices both on the world market and within the ESC.

A supplemental levy, computed as the difference between an almstVaT iv eTy determined "sluice-gate" orimport price, and, offer price of imported poultry. The supplemental levy is ostensibly aagainst dumping.

On present imports of MS poultry by Vest Germany.

The regular lovjr amounts2 cents per lb.

The supplemental levy amount to . .7 cents per lb.

The total levy therefore9 cents per lb.

Since the price-before-levy of US quality chicken Is aboutents per* Hamburg, the totallevyents per lb. is equivalentperceot import duty.

Relative powers over Common Market poultry regulations of the EEC Commission {supranational boHy) and the EtfC Council of Ministers (composed of national

Changes in the regular lnport levy and In theprice can bo proposed by the Cosstissloa, but require unanimous approval of the Council, Beginninguch changes can be approvedualified majority

vote of the Council.

The Commission can on Its own authority change the sup-lesental levy, but only on the basisactualthat it does not accurately reflect thence between the sluice-gate price and the actual offer prices of imported poultry.

aoetingpril. The council pigeonholed the proposal for "further study."

Vice President Mansholt of the EEC Commission was in Washingtonpril discussing poultry and other agricultural problems with US officials. Mansholt and the EEC Commission are more sympathetic to the US on these problems than some of the EEC national governments. The Commission, however, cannot in general make commitments on the poultry levies without approval of the EEC ministerial council, which reflects moro directly the individual national interests within the Common m|

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