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EU to probe exports of rice

A man stacks sacks of rice at a warehouse in Phnom Penh in January of 2016.
A man stacks sacks of rice at a warehouse in Phnom Penh in January of 2016. Hong Menea

EU to probe exports of rice

The European Commission has found sufficient evidence to launch an investigation into whether Cambodian rice exported to the EU puts an unfair burden on European rice farmers, potentially imperiling the Kingdom’s tariff-free exports to the bloc.

The investigation was launched on March 16 in response to a request from Italy, which called for “safeguard measures” – most commonly import restrictions or tariffs – to be imposed on rice from both Cambodia and Myanmar, according to a notification of the investigation published in the EU’s official journal.

“Having determined . . . that there is sufficient prima facie evidence to justify the initiation of a proceeding, the Commission hereby initiates an investigation pursuant to Article 24 of the GSP Regulation,” the notification says, referring to the Generalised Scheme of Preferences, which currently grants Cambodian exports tax-free entry in the European market under the Everything But Arms (EBA) scheme.

Under the GSP’s Article 24, import tariffs can be re-applied to a product if it is determined that the product “is imported in volumes and/or at prices which cause, or threaten to cause, serious difficulties to European Union producers of like or directly competing products”.

Any re-introduction of tariffs on Cambodian rice could have disastrous effects on the industry. The EU accounted for more than 40 percent of Cambodia’s total recorded rice exports last year.

The EU Commission’s investigation team has already held their first meeting with officials from the Ministry of Agriculture and Ministry of Commerce according to Hean Vanhan, director-general of the Agriculture Ministry’s General Directorate of Agriculture.

“We are now meeting with the EU, and we have no idea about the result yet,” he said.

“If there is no political interference, I believe that the negotiation will not be difficult, as our exports are based on the EBA agreement.”

Vanhan declined to provide further details about the meeting. Representatives from the Commerce Ministry could not be reached yesterday.

Cambodian rice sector representatives said yesterday that the investigation was worrisome, and questioned the legitimacy of Italy’s complaint.

“Our rice species are different from Italy’s rice, so what they raise up, it is not possible to hurt their local producers,” said Hun Lak, vice president of the Cambodia Rice Federation.

Lak stressed the investigation and subsequent ruling should not be related to the Kingdom’s deteriorating political situation, as did Song Saran, CEO of AMRU Rice, one of the country’s largest rice exporters.

While the EBA agreement overall is dependent on certain conditions related to political and labour rights, the specific clauses underpinning the rice investigation do not mention rights.

“The investigation from the EU is a huge concern, and threatens rice exporters and farmers’ living condition,” Saran said yesterday, arguing that Italy’s concerns were due to global market factors and not related to Cambodian rice.

“The drop down of rice prices impacts not only Italy’s rice market, it is a global issue,” Saran said. “We export only fragrant rice, and the volume is not as big as what Italy is saying.”

The share of the EU rice market captured by Cambodian rice has grown from 13 percent five years ago to 21 percent last year, according to the EU. Meanwhile, the share of the rice market controlled by European producers has fallen from 52 percent to 30 percent over the same period.

Italian rice farmers have complained about Cambodian rice imports since at least 2014, but this is the first time a formal investigation has been launched by the commission.

EU regulations stipulate the investigation must be completed within a year of its March 16 starting date.

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