Food industry policy: Part II
Industry lobbies for changes to environmental, trade policies
By Ahmed ElAmin
12/21/2006 — In the second of a two-part series FoodProductionDaily.com examines the food industry’s strategy in lobbying EU legislators during the upcoming year on environmental policies and international trade issues.
Environmental and waste policies have a direct impact on plant operations. International trade issues such as new custom’s rules, and increased access to the EU for developing countries have a ripple effect along the supply chain.
The sector’s positions are set out in a memorandum issued by the Confederation of Food and Drink Industries of the EU (CIAA). The document serves as an outline of the industry’s agenda over the next six months when the CIAA lobbies the European Commission and politicians on behalf of member food associations.
The CIAA issues such memoranda as proposals to the country that takes over the leadership of the EU presidency every six months, in this case Germany, which replaces Finland on 1 January.
In general, the CIAA’s general stance has been toward attempting to hold back the tide of legislation in favour of self-regulation.
On the environmental front the CIAA is concerned that the EU greenhouse gas Emission Trading Scheme (ETS) is being unfairly applied across the bloc.
The European Commission is currently reviewing the ETS directive, and plans to table a proposal for revised legislation in 2007. The CIAA has criticised the scheme for being a heavy administrative burden on small plants, which is often disproportionate to the low level of their actual emissions.
ETS is mandatory for food and drink companies operating combustion installations with a rated thermal input exceeding 20 MW. The importance of the scheme for the food and drink sector is reflected in the fact that, for instance, in France 13.6 per cent of all ETS installations are food and drink sites, the CIAA noted.
The CIAA favours the exclusion of lowest emitters from the scope of the ETS and calls for the sharing of emission reduction burdens across all
economic sectors, both inside and outside of the system.
In their national allocation plans (NAPs) for the first ETS phase, member states applied different definitions to the term ’combustion installation’ used in the directive, the CIAA claims.
"These inconsistencies in the scope of the ETS lead to competitive distortions amongst companies and sectors from different member states," the CIAA stated in the memorandum.
In relation to the EU’s policy toward by-products, the CIAA is calling for planned revisions to clarify the term under its current waste directive.
The European food and drink industry is a major producer of a variety of by-products that are used in a wide range of other sectors, such as animal feed, fertilisers, cosmetics, pharmaceutics and bio-fuels.
"The current lack of legal certainty for by-products and inconsistent interpretations of the definition of waste by member states hampers the efficient use of natural resources in industry, if economically useful products are wrongly classified as waste," the CIAA stated.
Another revision to establish a waste hierarchy of priorities, should not be put in place as law, but should be understood as a flexible policy to be applied according to the resources available in a particular region, the CIAA stated.
"Re-use, recycling and other forms of recovery all make an important contribution to environmentally sound waste management and should, in principle, be treated equally," the CIAA stated. "The waste hierarchy should provide sufficient flexibility for non-bureaucratic deviations based on the consideration of environmental, economic and social impacts of individual measures."
In relation to the implementation of the EU’s directive on packaging and packaging waste, the CIAA calls for a balance between the environmental objective of the law with the requirement to guarantee the proper functioning of the internal market.
Recent Commission studies reveal that while the directive has succeeded in meeting its environmental objective, it is falling short of its internal market objective, the CIAA stated.
Member states should not be allowed to create unjustified barriers to trade and distortions of competition by introducing discriminatory national packaging
measures, such as eco-taxes, product fees, mandatory deposits or quotas which are not justified on environmental grounds, the CIAA stated.
"In particular, there is no need to systematically promote re-usable packaging as no hierarchy exists between the re-use of packaging and the recovery of packaging waste," the CIAA stated. "Factors that make packaging re-use systems environmentally preferable in certain cases are very context specific. No general environmental preference can be established between re-use and recycling."
Another environmentally themed subject of concern to the industry is the EU’s Integrated Product Policy (IPP). The Commission is working on the implementation of the policy, which proposes a strategy to strengthen product-related environmental goals.
"The EU food and drink industry is firmly committed to the continuous improvement of its products’ performance along the lines of economic, social and environmental sustainability," the organisation stated. "The CIAA therefore notices with concern that the current IPP approach addresses exclusively the environmental dimension of sustainability and thereby neglects other important characteristics of food products, including quality, health, nutritional value, safety and consumer choice."
The CIAA believes instead of mapping environmental “hot spots,” the IPP should foster innovation as a means of continuously improving the product performance at all stages along its life-cycle, including its environmental, economic and social implications.
"As innovation cannot be imposed by public decree, IPP should remain a business led approach towards sustainability," the CIAA stated. "IPP should be based on the principle of shared responsibility. Each actor along the life-cycle - including suppliers, producers, retailers, consumers and public authorities - has to continuously optimise the environmental performance in their direct sphere of responsibility."
The CIAA also opposes any mandatory IPP rules aimed at discouraging the consumption of individual products on purely environmental grounds.
The Integrated Pollution Prevention and Control (IPPC) directive is another environmentally-aimed policy the CIAA is concerned about.
The IPPC essentially calls on industry to invest in more sustainable production techniques. To date, European food and drink industries have made
significant investment in clean technologies and best available techniques (BATs), in order to conserve natural resources and minimise waste generation, the CIAA argues.
The Commission is currently reviewing the IPPC directive and the CIAA says a meaningful assessment should be confined to key issues that include a better definition of the thresholds of activities and installations covered.
"The definition of BATs and the determination of the production capacity are key aspects in this context," the CIAA stated.
The association worked with the Commission and the IPPC regulator to draw up a reference list of BATs for the food, drink and milk sectors. The document was published in the EU’s official journal in October 2006.
As the list was only recently adopted the CIAA calls for sufficient time to assess the implementation and functioning of the current reference list before any srevision is considered by the Commission.
"In its implementation, the BREF document should be applied as ’reference document’ that should never impose a ’one-technique-fits-all’ approach applicable to all cases," the CIAA stated. "Proper consideration of geographical location, local environmental conditions, hygiene and food quality constraints should be given when deciding the techniques to be applied."
CIAA also called on the Commission not that make revisions that would lead to a change in approach, mainly towards benchmarking.
"Due to the high structural diversity of the European food, drink and milk sectors, including numerous sub-sectors, and due to large differences in locations, productions profiles and capacities of sites in each individual sub-sector, a very cautious approach must be taken towards benchmarking," the CIAA stated.
Another EU environmental policy that affects the food industry is the bloc’s strategy to encourage the production and use of biofuels. The food and drink industry is competing for some of the same raw materials used in the production of biofuels and believes that the increased demand for such crops would increase the price for feedstock and ingredients.
CIAA members are already facing price increases for rapeseed oil, the association noted. The trend, which is expected to continue, can be explained by different factors, notably the development of the biodiesel industry and the total shift of food demand from soy oil into rapeseed oil because of concerns over genetically modified crops.
"Biodiesel and bioethanol production should be developed in a balanced way," the CIAA stated. "The monitoring proposed by the Commission of the impact of the biofuels strategy on markets and on availability of agricultural raw materials is essential and may allow a problematic situation to be identified."
The CIAA believes that a diversification of sources for the production of biofuels will avoid exacerbating pressure on a single raw material supply and will prevent disruption in the food markets.
"The impact of fuel tax exemptions and of mandatory incorporation of biofuels on the availability of raw materials will have to be fully assessed," the CIAA stated.
In terms of the food and drinks industry’s policies to international trade, the CIAA said it welcomes provisions aimed at radically simplifying and modernising EU customs legislation. The proposed changes include a reduction in administrative burdens and costs faced by EU companies importing ingredients or foods into the bloc.
"Moreover, the industry supports all initiatives enabling the creation of a genuine single market for customs in the EU," the CIAA stated. "Dealing with different interpretations of the customs code in the 25 member states creates additional costs and barriers to trade."
A modernised customs code should lead to a thorough simplification and management of the inward processing regime (IPR), both at national and EU levels, the CIAA stated.
"Indeed, the economic importance of IPR will increase in the years to come, particularly as a result of the progressive elimination of export refunds," the CIAA stated. "The rules on equivalence, diverse provisions regarding authorisation procedures and the deadlines allocated to the various stages of these procedures make IPR particularly difficult to use for several sectors of the food and drink industry."
The proposed changes the CIAA supports include plans to rationalise customs procedures, making electronic communication standard and developing a common approach to risk analysis.
Another issue is the Commission’s attempt at a new approach for the determination of rules of origin in preferential agreements with non-EU countries.
The Commission presented its plans in March 2005, with a declared objective of simplifying the rules by relaxing them in order to encourage greater integration of developing countries in world trade.
The new approach should be applied in the context of both the Generalised System of Preference rules and the European Partnership Agreement with African, Caribbean and Pacific developing countries. In a second stage, all existing and future preferential trade arrangements may be involved.
"Two major points have raised concerns in the food and drink industry during the debate that was triggered with the Commission’s communication," the CIAA stated. "On the one hand, the Commission has proposed replacing current methods of determining origin with a single rule based on value added and, on the other, transferring responsibility for determining the origin to operators."
Overall, the CIAA believes that the proposed reform should not apply in the food and drink sector as it does not provide for simplification and misses the Commission’s objectives. The association believes that applying one single criteria — the value added method — for all products, including the food and drink sector, is not feasible.
"On the contrary, it would worsen the current situation," the CIAA stated. "Indeed, even if the current system is complex, the proposed reform would add further complexities and administrative burdens, is not development friendly and would increase potential for fraud in the food and drink sector."
The increased responsibility being placed on the importer is a major concern for EU operators as, due to confidentiality reasons, most of the EU importers will not be in a position to make the necessary checks with their supplier as required under the proposals.
Another trade issue is the ongoing reform of the EU’s Common Agricultural Policy (CAP), to reduce subsidies to farmers. The CIAA supports CAP simplification as a means of increasing the competitiveness of the agri-food industry and the food chain.
In terms of the World Trade Organisation (WTO) negotiations on cutting subsidies and national barriers to international trade, the CIAA calls for countries to get back to the debate after previous rounds fell apart.
"The EU has already shown a high degree of flexibility and openness and cannot continue improving its offer with regard to agricultural products without any outlook on what may be obtained in return from other partners, notably on domestic support and export competition commitments," the CIAA stated. "Considering the need for agreeing on disciplines in export competition and on domestic support, the multilateral negotiation process cannot be replaced by the bilateral negotiation."
The CIAA believes that the Doha Development Agenda (DDA) is unlikely to deliver the expected market access improvements, notably in emerging economies where growth rates are highest.
"With the special and differential treatment, cuts in bound rates will not or only minimally reduce applied rates in the most advanced developing countries," the CIAA stated.
Although bilateral agreements cannot be a substitute for the multilateral approach, these are still needed to improve market access to overseas markets. Bilateral agreements can also be used to effectively address non-tariff barriers that appear in the form of technical barriers to trade, such as restrictive ones involving labelling, additives, taxtes, and sanitary and phytosanitary measures.
Bilateral agreements can also be used to effectively protect intellectual property rights, including the EU’s system of geographical indications for beverages and food products.
"Our internal EU rules, whether they are related to food law, environment or other policies should take into account external considerations and should aim for a better consistency with our main trading partners," the CIAA advises.
Another issue of concern to the CIAA is the bloc’s Rapid Alert System for Foodstuffs and Feedstuffs (RASFF). The system is operated by the European Commission as a means of communicating food safety breaches to national regulators.
The CIAA said the food industry has assessed the functioning of the system and has come to the conclusion that procedures must be harmonised among regulators issuing the alerts to avoid different interpretations of the law.
"CIAA finds it important to evaluate the validity, accuracy and necessity of notifications carefully and to make the outside reader aware of existing national legislation that could trigger alerts," the association stated. "To use the system as an effective communication tool, such information is important, and it is also necessary in order to avoid misleading or contradictory warnings, as some warnings are not food safety related."
The CIAA also called for the food operator concerned to be informed of the problem as part of the procedure as early as possible. The operator must have the right to provide further information, such as test results, in order to add to the evaluation, the CIAA stated.
The CIAA’s membership is made up of 24 national federations, including two observers. There are 32 EU sector associations, 21 major food and drink companies grouped together in a liaison committee.
Part one of this two-part series covered the CIAA’s policy on regulatory approaches to quality schemes, novel foods and ingredients, additives and enzymes, additives and flavourings, enzymes, nutrition and health claims, vitamins and minerals additives, labelling and obesity.