Brussels, Belgium
December 11, 2002

IP/02/1845

The European Commission today adopted a proposal asking the Council to approve the agreement on
a new regime for imports of medium and low quality wheat and barley reached with both the US and
Canada in November. The agreement, in the form of an exchange of letters between the EU on the one
side and the US and Canada on the other, foresees the opening of a tariff rate quota (TRQ) of 2 981
600t for medium and low quality wheat with a duty of 12€/t. The US will benefit from a country
allocation of 572 000t and Canada of 38 000t within this quota. Outside the quota the duty will be
95€/t. For barley, a quota of 50 000t will be opened for malting barley, with a duty of 8€/t, and
another quota of 300 000t with a duty of 16€/t for other barley. Outside the quotas the current duty
of 93€/t will be maintained. After adoption of the proposal by the Council, the new system will be
implemented on 1 January 2003.

"This new regime will enable the EU to correct the malfunctioning of the current cereal import system
and restore the balance in our market. However, it is designed to fully honor our WTO
commitments, keeping our markets open for imports from all supplier countries, especially for high
quality products", said Franz Fischler, EU Commissioner for Agriculture, Rural Development and
Fisheries.

Background

On 26 July 2002, the EU notified to the WTO its intention to modify its import regime for cereals
based on Article XXVIII of the GATT. This article enables WTO members to modify concessions
contained in their schedules of commitments. The Understanding on Article XXVIII specifies the
rules to follow to calculate the amount of compensation that a WTO member should provide when
an unlimited tariff concession is replaced by a quota.

In this framework, the Commission conducted negotiations with the US and Canada with a view to
modifying the import regime for low and medium quality wheat and barley. Agreement was reached
with those two countries on 12 November (See IP/02/1656 and IP/02/1657).

The current system to calculate EU import duties for cereals will remain in place for cereals other
than medium and low quality wheat and barley. This system is based on representative world
market prices and the import duties will continue to be calculated on the basis of the difference
between world prices and 155% of the EU intervention price.