SA takes on EU in dispute over stringent new regulations on exporting oranges
The South African citrus industry, which employs more than 140,000 workers and generates about R30-billion in export revenue, is under threat after the EU suddenly introduced measures SA says are unjustified, disruptive to trade and impossible to implement.
Stringent new measures relating to the export of citrus — primarily oranges — from southern Africa to the European Union have been implemented under recently revised and adopted regulations by the European Commission (Annex VII to Implementing Regulation (EU) 2019/2072).
The requirements came into effect on 24 June 2022 and have been implemented since 14 July 2022. Although some South African citrus consignments were already on their way to Europe before the new regulations were implemented, they have also been affected.
The new regulations amend the plant health rules, primarily those on the false codling moth. Before being exported, citrus from southern Africa is now required to undergo cold treatment at temperatures between 0°C to -1°C for at least 25 days.
According to the EU, the measures are intended to prevent the introduction and spread of Phyllosticta citricarpa — citrus black spot — in the European market. Citrus black spot is a fungal disease that affects citrus fruit development.
South African citrus shipments bound for the EU have experienced the highest number of citrus black spot interceptions in the past 10 years, followed by Argentina and Uruguay.
There were 43 detections from South African citrus consignments in 2021. Notwithstanding the importance of the EU market to the South African citrus industry, the recurrence of citrus black spot on their exports threatens this market.
The EU is South Africa’s second most important market for agricultural products, which accounts for 27% of total agricultural exports. Although South Africa has secured improved market access in the EU through the Economic Partnership Agreement (EPA), the new plant health regulations have imposed additional compliance requirements that are costly for South African citrus exporters.
South Africa has raised concerns with the EU about the revised plant health regulations that are seen as trade restrictive.
South Africa’s specific concerns include the precooling obligations, which require the use of a technique known as forced-air precooling. It needs specialised facilities, infrastructure as well as onerous supervision obligations.
The requirements are difficult to comply with, disruptive to trade and will reduce the amount of South African oranges exported to the European market.
In the past 10 years, South Africa’s citrus industry has implemented measures to meet the EU’s CBS phytosanitary requirements. These initiatives have been costly for the citrus industry and are difficult to implement.
South Africa has previously expressed concerns to the World Trade Organization’s (WTO) Sanitary and Phytosanitary Committee, claiming the measures implemented by the EU following the interceptions are not scientifically justified, lack technical basis and are inconsistent with the level of risk posed by CBS found on fruit exported to the EU.
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As a result of the new EU regulations on the false codling moth, South Africa has requested WTO dispute consultations with the EU regarding certain restrictions on South African citrus fruit imports.
South Africa is contesting the recent changes to EU phytosanitary requirements for the importation of oranges and other citrus products containing false codling moth. South Africa claims that the EU measures violate various provisions of the WTO Agreement on the Application of Sanitary and Phytosanitary Measures and the General Agreement on Tariffs and Trade of 1994.
This is South Africa’s first WTO dispute settlement case, which is prompted by the failure of the EU to recognise South Africa’s already strengthened systems approach to integrated pest risk management of the false codling moth.
One of the concerns raised by South Africa is the unfairness and irrationality of imposing burdensome requirements relating to precooling obligations for South African citrus exports. The new regulations have been imposed in the middle of exporting season, when export plans were already completed.
The request for consultations formally initiates a WTO dispute. Consultations allow the parties to discuss issues of concern and reach amicable solutions without resorting to litigation. If consultations fail to resolve the dispute within 60 days, the complainant may request adjudication by a panel.
The preferred goal of the dispute settlement understanding is for the members to settle the dispute in a way that is consistent with the WTO agreement. To this end, the first stage of formal dispute resolution is bilateral consultations between the parties.
These consultations allow the parties to discuss the issue and come to an agreement without resorting to litigation. Only if the mandatory consultations fail to produce a satisfactory solution within 60 days may the complainant request panel adjudication. Even if consultations have failed to resolve the dispute, the parties can always reach a mutually acceptable solution.
Through the dispute consultations, South Africa seeks to convince the EU to base sanitary and phytosanitary (SPS) measures on scientific principles and risk assessment as outlined in the SPS agreement. The SPS agreement emphasises a technical approach to risk assessment.
The new EU plant health regulations and their rapid implementation has unsettled the South African citrus industry. The new regulations are expected to have a negative impact on the industry.
The industry employs more than 140,000 workers and generates about R30-billion in export revenue. The reduction in citrus exports to the EU because of the new stringent plant health regulations will have an impact on the South African economy as well as the economies of neighbouring countries.
One hopes the consultations will produce positive results and avoid the lengthy dispute resolution process, which will be costly and has no guarantee of a positive outcome. DM/MC/BM
Dr Noncedo Vutula is a senior research fellow at the Nelson Mandela School of Public Governance. She has held various senior government positions, where she has provided technical advice on a broad range of agricultural trade issues, trade negotiations as well as on rural economic transformation for growth of the smallholder farming sector, including markets, skills and infrastructure.
Thembekile Mlangeni is a visiting research fellow at the Wits School of Governance and a director in market access issues at the Department of Trade, Industry and Competition. She is a qualified and experienced international trade negotiator.