Tinned tomato sanctions may put EU free trade deal at risk, former Italian minister says

An argument over cheap tinned tomatoes could pose a threat to Australia negotiating a free trade agreement with the European Union (EU).

Key points:

  • EU’s trade commissioner warns import sanctions on cheap tinned tomatoes could have serious implications
  • Australia, EU can be accused of taking protectionist stances in trade negotiations
  • Australia is due to begin negotiating with the EU over a free trade deal next year

Former Italian minister for agriculture Paolo De Castro, who is now a member of the European Parliament, told the ABC a decision made by Australia’s Anti-Dumping Commission was an “obstacle” to any agreement.

In February, the Anti-Dumping Commission found that the exporters of the Feger and La Doria brands of tinned tomatoes had harmed the local industry by dumping their product in Australia at a reduced price.

It was recommended that import duties be imposed on both brands.

Last week the EU’s trade commissioner, Cecilia Malmstrom, warned that such sanctions could have serious implications.

“The Commission has made Australia aware that the imposition of these measures has the potential to develop into a significant trade irritant given its systemic implications and may even undermine support for a future free trade agreement with Australia,” she said.

Mr De Castro, who until recently chaired the European Parliament’s Agriculture Committee, said the EU could take action in the World Trade Organisation (WTO).

“I think we have a strong argument if we go to the WTO,” he said.

“We have a strong argument against this decision.”

While both parties are committed to negotiating a free trade agreement, in the case that may hold up the negotiations, both Australia and the EU can be accused of taking protectionist stances.

Anti-dumping penalties are inconsistent with free trade principles.

The Productivity Commission has previously criticised these measures saying the costs imposed on the community exceed the benefits.

Agriculture industry receives substantial EU subsidies

In the EU, the agriculture industry receives substantial subsidies. Around 40 per cent of the EU’s budget goes into what is known as the Common Agricultural Policy (CAP).

Australian tinned tomato producer SPC estimated in it’s submission to the Anti-Dumping Commission that from 2010 to 2014 the processed tomato industry in Italy received more than $1.2 billion in subsidies under the CAP plan.

Mr De Castro said he was not sure about the figures quoted by SPC, but said the subsidies program had been reformed and was now tied to the “behaviour of the farmers” in relation to environmental protection and animal welfare.

Australia is due to begin negotiating with the EU over a free trade deal next year.

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