Competitiveness

CAOBISCO’s priority is to maintain and enhance its export competitiveness by prevailing and improving market access opportunities through bilateral trade agreements.

Supporting the competitiveness of European manufacturers

The chocolate, biscuits and confectionery industries are amongst Europe’s most dynamic and largest manufacturing and exporting sectors. They contribute strongly to local communities’ vitality and to the European economy. CAOBISCO members create jobs as well as a wide choice and variety of products for their consumers.

The competitiveness of CAOBISCO industries needs to be supported to help the sector facing the challenges driven notably by the global economic downturn or the rise in raw materials and energy prices through the following measures:

  • An improved integration of legislation and industrial policy at European level to provide a flexible and business-friendly framework in which CAOBISCO members can operate, in particular SMEs
  • A sustainable access to adequate supplies of raw materials that are safe, of high quality and competitively priced
  • A consistent EU trade policy stimulating growth through balanced free trade agreements with third countries.

Example of the lack of coherence between legislation and trade policy: Rules of origins in bilateral trade negotiations

Preferential rules of origin apply with countries that have a preferential trade agreement with the EU and in this context the rules of origin are fundamental to determine the customs duty to be paid according to the origin and manufacture of the product and its related content/ingredients.

A new regulation determining preferential rules of origin under the General System of Preferences (GSP) entered into force on 1 January 2011, with the aim to simplify rules and procedures for developing countries wishing to access the EU’s preferential trade arrangements, while preventing fraud.

The new Regulation bases the determination of origin of food products on weight rather than the value criteria with the objective to simplify origin rules. For CAOBISCO products for instance, it has been determined that the product imported from preferential “GSP” countries with a preferential trade arrangements could only include a limited percentage in weight of non-originating sugar and dairy (i.e. maximum 40% of the final weight for sugar or dairy and 60% for sugar and dairy combined).

However, while the GSP rules would only concern imports of products into the EU, the European Commission decided in 2011 to negotiate reciprocal rules of origin in new bilateral Free Trade negotiations on the basis of the GSP criteria, meaning that the determination of origin would also affect products produced in the European Union and exported to third countries (if these rules are accepted by both Parties during the FTA negotiations).

Knowing that CAOBISCO industries are and will be more and more dependent in using non-EU materials in their products (sugar for instance), the Commission’s decision could have serious negative consequences on CAOBISCO’s export business and competitiveness.

Therefore CAOBISCO is asking the Commission to:

  • ensure that preferential origin rules on sugar negotiated are as less restrictive as possible in the use of non-EU materials in times of supply deficit on the EU market.
  • discourage the Commission to negotiate in bilateral talks with third countries on the weight criteria for sugar for our products but rather on value as in the past;
  • advocate accounting segregation in order for suppliers to store non-EU sugar with EU sugar without the whole storage being identified as non-originating.

Rules of origin in Free Trade Agreements

Simple value-based sugar origin rules for the export competitiveness of CAOBISCO industries

CAOBISCO represents the Chocolate, Biscuits and Confectionery Industries in Europe amongst which membership, a large number of SMEs. Out of an annual production of 11 million tonnes, around 2 million tonnes of our produce is exported outside the European Union. CAOBISCO industries employ more than 300 000 people across Europe and create high value-added for the European economy. The survival of our manufacturing industries heavily depends on our future export competitiveness.

  • Free Trade Agreements signed by the EU play a vital role in securing new opportunities for the industry to access overseas markets. Rules of origin are a key part of these agreements. The rules need to be respected in order to benefit from tariff concessions agreed. Rules negotiated in FTAs should therefore remain clear, simple and harmonised, and must not act as a barrier to EU exports.
  • Sugar is the main ingredient in CAOBISCO products. Current rules of origin in FTAs set a value limit on non-EU sugar in our products of 30%. The rule is respected by all manufacturers, is internationally recognised and should be maintained in all future EU FTAs.
  • In recent trade agreements e.g. Singapore and Vietnam, the EU has switched to weight based rules of origin. The intention is to limit non-originating material, sugar in this case, based on a weight percentage of the final product. This represents a huge obstacle for our exports, threatens growth and jobs in our industry and undermines the creation of value-added in the European Union.
  • Weight-based rules of origin will lead to drastic barriers to our exports. This situation not only leads to more administrative burden to operators having to comply with different rules in FTAs but also restricts the use of non-EU sugar which is and will continue to be sourced by sugar suppliers in the future in order to respond to the needs on the market.

 

CAOBISCO mainly uses raw materials sourced in Europe and wishes to do so in the future. However, agricultural commodities are traded globally and sugar suppliers are not able to prove the origin of the sugar without a supplier declaration. Both suppliers and CAOBISCO manufacturers must be allowed to apply accounting segregation. To do so, EU customs administrations must put in place the correct procedures for processing applications for all preferential export markets.

Chocolate.org
Statistics about the European sector of chocolate, biscuits and confectionery products.