How Effective is the EU’s Import Regime for Oranges?
Paper presented at the 98th EAAE Seminar "Marketing Dynamics
within the Global Trading System: New Perspectives",
June 29 - July 2, 2006, Chania, Crete, Greece
Linde Gotza and Harald Gretheb
a Institute of Agricultural Economics, Georg-August-University Gottingen, Germany
b Institute of Agricultural Economics and Social Sciences, Humboldt-University of Berlin, Germany
[email protected], [email protected]
Keywords: trade preferences, oranges, tariff rate quota, entry price
Abstract: EU imports of oranges are restricted not only by ad valorem tariffs but also by the
entry price system establishing a minimum import price. In addition, the EU applies a
comprehensive system of trade preferences. The hypothesis of this paper is that, in contrast to
its complexity, the effectiveness of the EU import system for oranges is low with respect to its
goals, i.e. protecting EU producers and creating imports from preference receiving countries.
The comparison of import prices for oranges from extra-EU countries with the EU entry price
shows that the former are about 40% higher than the latter on average. Also, it is pointed out
that at least 72% of extra-EU orange imports during the EU harvest season enter the EU
tariff free. As a conclusion, the contribution of the import regime to the protection of EU
producers is low.
Concordantly, the preferential entry price is not utilized by orange preference receiving
countries. Besides, although orange quotas increased from 1991 to 2003, actual exports from
Mediterranean countries and thus quota filling rates have decreased over the same period. It
is shown that EU trade preferences for oranges were not decisive for the development of
Mediterranean countries' orange exports to the EU. In the light of the low effectiveness of the
entry price system for oranges along with high transaction costs involved, its abolishment
should be considered. Yet, results cannot be generalized, even not for citrus fruit, as is
demonstrated for mandarins.
Helpful comments made by Stephan von Cramon-Taubadel on a draft version and financial
support by the Volkswagen foundation are gratefully acknowledged.
1 Introduction
The EU’s import system for oranges is designed to follow two contrasting goals. On the one
hand it intends to protect EU orange growers by the means of an ad valorem tariff and a de
facto minimum import price established by the EU entry price system. This allows creating an
EU market price which is higher than the world market price. On the other hand, the EU aims
to induce orange imports from preferred trading partners by a comprehensive system of trade
preferences. Countries which are granted trade preferences have superior EU orange market
access compared to countries which are not covered by trade preferences, the so-called most-
favoured-nation (MFN) suppliers. Preferential market access is established by a preferential
ad valorem tariff, which is lower than the MFN ad valorem tariff, and is in some cases
supplemented by a preferential entry price, which is lower than the MFN entry price.