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  • QA 159
    Question:
    What effect will the expiry of the Cotonou Agreement (end 2007) have on coffee exports to the European Union?
    Background:
    The Cotonou Agreement between the European Union and the ACP group of countries, many of whom are in Africa, comes to an end in December 2007. What impact will this have on coffee exports to the European Union?
    Asked by:
    Grower/exporter - Zambia
    Answer:

    On green coffee exports, none. The EU does not raise import duties on green coffee. For processed coffee exports the situation is however not clear as yet.

    The Cotonou Agreement provides extra duty preferences to a special group of developing countries, mostly former colonies of EU member countries. Usually these are referred to as ACP (Africa, Caribbean, Pacific) countries. But, because the EU does not levy any import duties on green coffee imports, expiry of this agreement is of no consequence for green coffee producers/exporters.

    The Cotonou Agreement has to be phased out because it is considered contrary to World Trade Organization (WTO) rules - a grace period previously agreed with the WTO runs out at the end of 2007. The intention is that the Agreement should be replaced by a series of bilateral Economic Partnership Agreements (EPA's) between the EU and the individual Cotonou countries. However, because such EPA's would also stipulate that these countries should in return open up their markets as well, the idea has not been well received. It appears current negotiations (July 2007) are deadlocked over how to resolve this and related issues, and it remains to be seen what solution(s) will be found.

    For processed coffee there is a duty issue however. This is important because some ACP countries (Côte d'Ivoire for example) do export processed coffee to the EU, mostly soluble. Without a solution or an extension of the WTO deadline the duty situation of such exports will be unclear by 1 January 2008. In theory shipments of processed coffee ex ACP countries could then attract the GSP (Generalised System of Preferences) duty rate of 3.1%. In practice though such a move is probably unacceptable, for all sides, but the current uncertainty certainly does not help exporters of processed coffee…

    NB: See topic 02.11.02 for more on world tariffs on processed coffee.

    Posted 12 July 2007

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