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Lower import tariffs for coffee, following the Uruguay Round of Multilateral Trade Negotiations, were not envisaged to have much effect on the world coffee market. Developed countries, by far the largest importers of coffee, already had low, or no import tariffs for the commodity, and therefore their reductions in duties would be relatively modest. The higher import duties for coffee largely applied by some producing countries, would not, with a few exceptions, be reduced significantly under the Uruguay Round. Therefore, factors such as economic growth, the relatively high level of consumption reached in the developed importing countries, changes in taste and preferences, weather conditions in supplying countries, were envisaged to play a more central role in shaping the world coffee marker by the year 2000, than the conclusion of the Uruguay Round.

Production. World coffee production is projected to reach 7.1 million tonnes by 2000, less than one percent above the pre-Uruguay Round estimate. This represents a growth of 1.3 percent per year between the late eighties and the year 2000. By contrast, world production of coffee grew al an annual rate of 2.6 percent during the preceding decade, when, after the disastrous frost of 1975 in Brazil, a huge draw-down in coffee stocks took place and prices reached unprecedented levels fuelling a massive expansion in coffee areas globally. This expansion carried on into the eighties and was the main cause for a production growth rate twice as high as the one projected for the nineties. Furthermore, the resulting over-supply situation in the eighties was exacerbated by the introduction of national price support schemes which shielded many producers from the effects of declining market prices. However, since the late eighties policies isolating coffee growers from lower prices have tended to disappear, at least partially, and therefore the rate of growth in global coffee production has decreased

Most of the limited increments to production stimulated by the Uruguay Round are expected to take place in Latin America and the Caribbean and Africa, where coffee output should reach to 4.24 million tonnes and 1.44 million tonnes, respectively. In Latin America and the Caribbean, the coffee crop is expected to increase slightly in Brazil, by 10 000 tonnes, Colombia, by 4 000 tonnes, and some other countries of the region, by 9 000 tonnes. In Africa, growth should occur mainly in Côte d'Ivoire, 5 000 tonnes, and Ethiopia, 3 000 tonnes, and to a lesser extent in Cameroon, Kenya and Zaire, with a combined 6 000 tonnes.

Demand. Global coffee consumption is also projected to expand, as lower import duties would translate into slightly lower consumer (retail) prices for coffee, and these into slightly stronger demand for the commodity. North America, Europe and Japan account for nearly 90 percent of world trade in coffee. imports of coffee into North America are to remain duty free, with the exception of coffee used as ingredient in substitutes. In the EC the 5 percent duty on green coffee will be phased out by 2000, and green decaffeinated coffee reduced from 13 percent to 8.3 percent. Tariffs levied on roasted coffee will be reduced by 50 percent from base rates of 15 percent for regular coffee and from 18 percent for decaffeinated. In Japan, where import duties were levied only on roasted coffee and substitutes containing coffee, the base rate of 20 percent will be bound at 12 percent by 2000. However, because of the slowdown in economic growth and saturation in some markets, world demand for coffee is only projected to grow by 1.8 percent per year between the hate eighties and the year 2000, compared with 2.3 percent a year during the previous decade.

Global coffee demand is projected to be about 130 000 tonnes greater in the year 2000 as a result of the Uruguay Round. More than 85 percent of this increase would be absorbed by developed countries, mainly in Europe. Europe and North America will remain the two largest coffee consuming regions with an estimated intake of around 2.8 million tonnes and 1.3 million tonnes, respectively. In Europe, the Uruguay Round would translate into a 3 percent increase in the level of coffee demand by the year 2000, while in North America projected consumption would remain unchanged from pre-Uruguay Round estimates. In Japan demand is projected somewhat higher as a result of agreed reductions in import tariffs.

Coffee consumption in developing countries would reach approximately 2.45 million tonnes, a modest increase of 18 000 tonnes from pre-Agreement estimates. Increased consumption in the developing world was likely mainly in Africa and Latin America, the main producing areas.

Trade6. Projections of world coffee imports were also revised upwards slightly as a result of the Uruguay Round. The relatively modest projected increase in global imports, of 118 000 tonnes, again reflects the reduction of import tariffs for coffee in some developed and developing coffee consuming countries and, which would encourage some growth in import demand. Consequently, world imports for coffee should grow, by 1.2 percent per year, to around 5.01 million tonnes by the end of the decade. coffee imports grew at an average annual rate of 2.5 percent per year during the eighties, underpinned by the abundant supply situation and the relatively depressed level of prices.

Import demand for coffee in developed countries is expected to grow at an annual rate of 1.14 percent, reaching 4.65 million tonnes by the end of the decade. Coffee imports would increase most strongly in Europe, by 69 000 tonnes. Smaller increases were projected for Japan and developed countries in Oceania and the area of the former USSR.

Coffee imports by developing countries as a whole were projected at 362 000 tonnes, 8 000 tonnes above the pre-Agreement estimates. Consequently, coffee purchases by developing countries were likely to grow by 2.0 percent per year during the nineties, compared to 1.6 percent during the preceding decade.

Most of the projected growth in exportable coffee supplies would originate in Latin America and the Caribbean and Africa, hut smaller increases were also projected in the Far East. Exports from Latin America and the Caribbean were projected to rise by l7 000 tonnes to 3.11 million tonnes, while in Africa coffee sales to overseas destinations would increase by 16 0110 tonnes to 1.14 million tonnes. In Latin America, increases in exports were projected, among others, for Brazil, 6 000 tonnes, Colombia, 3 000 tonnes, and Costa Rica, 2 000 tonnes. Coffee exports in Africa would increase mainly in Côte d'Ivoire, by 5 000 tonnes, Ethiopia, by 4 000 tonnes, Kenya, by 3 000 tonnes, Zaire, by 2 000 tonnes and Cameroon, by 1 000 tonnes. Increases totalling close to 6 000 tonnes were projected for developing coffee exporters in other regions, mainly the Far East.

Prices. As a result of the Uruguay Round, consumer prices for coffee should decline slightly in certain markets, encouraging some rise in demand for imports there. Nevertheless, a major factor affecting overall market growth will continue to be the slower rate of increase in certain markers such as western Europe and North America where consumption approaches near saturation. The incremental growth in demand for coffee should underpin export prices in producing countries, encouraging a positive supply response. However, the impact of a stronger world demand for coffee, should outweigh the impact of an eventually larger availability of supplies, and therefore, at the world market level, coffee prices in 2000 should be slightly firmer than without the effect of the Uruguay Round. As for the actual price level, this would depend also on other factors which directly affect supply and demand, such as weather conditions in producing countries and the stock levels in importing countries as well as any policy measures such as export retention schemes, which have not been modelled in this analysis.

Table 14: COFFEE - Commodity Balances, 1987-89 Average, 2000 Baseline and 2000 Uruguay Round Scenarios


Following the Uruguay Round of Multilateral Trade Negotiations, import duties on cocoa products are to be reduced in several major markets. Import duties on cocoa beans, in place mainly in cocoa producing countries, are also to be reduced in some importing countries. In the period to 2000, cocoa exports from developing countries will continue to be mainly in the form of beans, and therefore gains ensuing from lower import duties on cocoa products should benefit developing countries mostly through stronger derived import demand for beans. Nevertheless, the reduction in import duties on cocoa beans and cocoa products is not expected to have a major impact on the world cocoa market.

Production. Global cocoa output is projected to reach 2.83 million tonnes, 2.8 percent higher than the pre-Agreement estimate. Consequently, global cocoa production is anticipated to grow by 2 percent a year between the late eighties and the year 2000, compared with 1.8 percent per year projected without the Uruguay Round. By contrast, world production of cocoa grew at 4.3 percent per year during the preceding decade, mainly because cocoa growers in major producing countries were, by means of diverse policy instruments, insulated from low market prices and thus encouraged to sustain production growth.

Most of the 77 000 tonnes projected increase in world cocoa output resulting from the Uruguay Round should originate in Africa and in the Latin America and Caribbean regions. Only marginal increases in output are projected for the Far East, but its share in total production is expected to grow from 13 percent during 198789 to around 28 percent by 2000, in line with previous projections. The larger share projected for the Far East would stem from continuing rapid growth, mainly in Indonesia and Malaysia, while production shares are expected to decrease in Africa and to decrease in Latin America. The share of Africa would decline from 57 percent in 1987-89 to around 50 percent in 2000, and that of Latin America and the Caribbean region from 28 to 20 percent, also in accordance with pre-Agreement estimates. By the year 2000, the Far East would displace Latin America and the Caribbean as the second largest cocoa producing region in the world; the Far East will continue to capitalize on its lower production costs, improved production techniques involving high yielding hybrid material and relatively unrestricted land availability.

Demand. World cocoa consumption is also projected to slightly exceed previous estimates, a direct reflection of lower import tariffs for the commodity agreed under the Uruguay Round. Global demand for cocoa should grow by 2.6 percent per year to about 2.83 million tonnes by 2000, compared to 2.3 percent per year projected prior to the conclusion of the Uruguay Round. Demand growth would nevertheless still be limited in major markets such as Europe, North America and the area of the former USSR, compared to the previous decade when world cocoa intake grew at an annual rate of 3.8 percent.

Cocoa consumption will continue to be concentrated mainly in developed countries, which would account for more than 80 percent of total demand in 2000. Cocoa intake by developed countries is projected to reach 2.34 million tonnes, an increase of 84 000 tonnes over pre-Agreement estimates, while demand in developing countries should reach 487 000 tonnes, 15 000 tonnes above pre-Uruguay Round projections.

Cocoa demand projections have been revised upwards for Europe, by 54 000 tonnes; North America, by 20 000 tonnes; and for other developed countries, by 11 000 tonnes. In North America, demand is now expected to grow from 548 000 tonnes in 1987-89 to 712 000 tonnes in 2000, reflecting a small increase in consumption per caput. European demand was likely to grow from about 929 000 tonnes in 1987-89 to around 1.23 million tonnes in 2000, and in the area of the former USSR from 169 000 tonnes to 194 000 tonnes during the same period. In Japan, with relatively low per caput consumption, cocoa demand is expected to grow from 102 000 tonnes in 1987-89 to 145 000 tonnes in 2000.

Cocoa consumption is also projected to increase slightly above pre-Uruguay Round estimates in Africa, by 7 000 tonnes; in Latin America, by 5 000 tonnes; and in the Far East, by 3 000 tonnes. Aggregate demand in the developing countries is projected to grow at 4.4 percent a year to reach 487 000 tonnes by 2000. Latin America and the Caribbean would remain the largest developing consuming region, accounting for 55 percent of consumption. In the Far East, the analogous share was projected to increase from 20 percent in 1987-89 to 28 percent in 2000.

Trade7. Projections for global cocoa trade in 2000 have also been revised upwards following the conclusion of the Uruguay Round. Lower domestic prices resulting from reduced tariffs would underpin stronger demand for imports in several markets. Consequently, world cocoa trade is expected to grow to 2.45 million tonnes by the cud of the decade.

World imports of cocoa are expected to grow by 1.6 percent per year during the nineties, compared to an annual growth rate of 1.3 percent projected prior to the Uruguay Round agreement. World imports of cocoa increased by approximately 4.5 percent per year during the previous decade when supplies were ample and market prices relatively weak, particularly towards the end of the period.

Import demand for cocoa in developed countries is expected to reach 2.34 million tonnes by 2000. Most of the increment in cocoa imports resulting from the Uruguay Round would be accounted for by countries of Europe and North America. The EC would remain the main import market for cocoa beans and products, absorbing more than 40 percent of globally traded supplies in 2000. In North America, import demand would grow by 1.3 percent per year, reaching 712 000 tonnes by the end of the decade. Cocoa import requirements in the area of the former USSR would remain almost unchanged from 1987-89 levels, at around 194 000 tonnes, while in Japan they are likely to increase from 118 000 tonnes in 1987-89 to around 145 000 tonnes in 2000.

Developing countries as a whole are expected to import 105 000 tonnes in 2000, a modest increase of 2 000 tonnes from pre-Uruguay Round estimates. Their demand for cocoa imports would grow by 1.6 percent per year during the nineties, and their purchases would account for about 4 percent of world cocoa trade in 2000.

The likely growth in exportable supplies resulting from the Uruguay Round Agreement would originate mainly in Africa, but smaller increases were also projected for countries of Latin America and the Far Last. Cocoa exports from Africa are projected to rise by 48 000 tonnes, with most of the additional volume originating in Côte d'Ivoire and Ghana. Exports from Latin America and the Far East would be higher in the year 2000, by 10 000 tonnes and 4 000 tonnes, respectively.

Prices. As a result of the Uruguay Round the import demand for cocoa should strengthen in markets where import duties are to be reduced, even though the reductions are generally rather small. Lower consumer prices should encourage the demand for cocoa and cocoa products and the impact of a somewhat stronger world demand for cocoa should exceed the impact of eventually larger supplies, and therefore international cocoa prices in 2000 should be slightly firmer than without the effect of Uruguay Round. The actual level of prices would continue to depend also on other factors such as national policies affecting cocoa production, policies affecting consumption levels in importing countries, weather conditions in producing countries, and the level of stocks in relation to demand, which were assumed exogenous to this analysis.

Table 15: COCOA - Commodity Balances, 1987-89 Average, 2000 Baseline and 2000 Uruguay Round Scenarios


The impact of the Uruguay Round on the world tea economy should be small for two reasons. First, trade in black tea is already relatively free of restrictions. In some of the world's largest importing countries, such as the United Kingdom and the United States, no restrictions are imposed on black tea imports, while tariffs are levied at low rates in most other major markets. The second is the expectation that structural surpluses would continue to prevail over the projections period, thus limiting increases in world market prices induced by stronger import demand following trade liberalization. However, since the Uruguay Round is projected to bring about significant increases in global income, there is likely to be a positive impact on lea consumption in addition to the tariff effects.

Production. Production expansion programmes initialed by many exporting countries have contributed to increases in output of black tea, and will continue to do so. World tea production is projected to increase from the 1987-89 annual average of 1 818 000 tonnes to 2 638 000 tonnes in 2000, implying an annual average growth rate of 3.2 percent. The Uruguay Round reduction in tariffs and other effects would induce a slightly higher growth in world production to 2 653 000 tonnes, or 0.8 percent above the basic projection.

Production in India is estimated at 966 000 tonnes in 2000, an average annual growth rate of 3.0 percent from the 1987-89 base. The Uruguay Round would have little effect on production growth in this country. Similarly, in Sri Lanka, the Uruguay Round is expected to induce production to increase by only 1 percent. Rather, most of the envisaged expansion is expected to result from recent economic reforms and the national plan for tea production expansion. Production by 2000 is projected to reach about 265 000 tonnes, compared to 216 000 tonnes during 1987-89.

Significant growth in production is also projected for all the other major tea producing countries. China and Indonesia would increase black tea production to 205 000 tonnes and 204 000 tonnes by 2000, respectively. The Uruguay Round would induce China to increase production by another 2.0 percent to 209 000 tonnes by 2000, and Indonesia by an additional 1.2 percent, to 206 000 tonnes.

Increases in both yields and planted area are likely to continue to support the strong growth in lea production in African countries. In Kenya small lea growers presently account for about two-thirds of planted area but for only half of the national production, suggesting that there is substantial potential for expansion. Output in Kenya is projected to increase at an average annual rate of 3.0 percent to about 250 000 tonnes in 2000. Malawi, Tanzania and Zimbabwe are also expected to increase production significantly. The Uruguay Round effect would be minimal on African tea production. Additional output would amount to only 3 000 tonnes, with Kenya accounting for more than half of this amount.

Consumption. While growth in the tea consumption in developed countries has slowed down, demand for lea in developing countries has increased significantly as a result of growing income and population. This trend is likely to continue. World black tea consumption is projected to increase from 1 842 000 tonnes in 1987-89 to 2 548 000 tonnes by 2000. The Uruguay Round would stimulate a 1.4 percent increase in consumption to 2 582 000 tonnes, implying an annual growth rate of 2.9 percent.

Developing countries would account for the larger part of the prospective increase, with consumption rising from the 1987-89 average of 1 176 000 tonnes to 1 842 000 tonnes by 2000, an annual growth rate of 3.8 percent considering also the effect of the Uruguay Round on demand.

Black lea consumption in India is projected to continue to rise rapidly, reaching about 750 000 tonnes by 2000, an annual growth rate of 3.9 percent between 1987-89 and 2000. In other major markets for black tea such as Pakistan, the Islamic Republic of Iran and Egypt consumption is projected at 210 000 tonnes, 138 000 tonnes and 108 000 tonnes by 200.0, respectively. The projections also suggest significant increases in the black tea consumption in other developing countries, such as Turkey where consumption would grow at an annual average rate of 2.4 percent to 180 000 tonnes.

By contrast in the developed countries, black tea consumption would increase only slightly. Consumption in the European Community is projected to remain stable in the next decade since somewhat higher purchases by Germany and France would counterbalance continued declines in the United Kingdom. Demand in the United States is projected to increase, though at a relatively low rate in the period to 2000. Since many developed countries impose no, or only small, restrictions on bulk and packaged black lea imports, the effect of tariff reduction on consumption is negligible.

In the area of the former USSR black lea consumption is projected to increase from 237 000 tonnes to 298 000 tonnes in 2000, with an annual growth rate of 1.9 percent over the period, based on increases in both domestic production and imports.

Exports. Net export availabilities are projected to be 1 325 000 tonnes in 2000. China, India, Indonesia, Kenya and Sri Lanka, would account for nearly 70 percent of the total projected export availabilities. Other exporting countries, particularly Bangladesh, Turkey, Malawi, Tanzania, and Zimbabwe, are also expected to increase export availabilities significantly during this period. The increase in the demand for imports due to the implementation of the Uruguay Round should not substantially affect world market prices due to the existence of ample export availabilities projected for the year 2000.

Substantial growth in export availabilities is projected for African tea exporting countries. Their total availabilities would amount to 340 000 tonnes in 2000 reflecting an annual average increase of 3.9 percent from actual exports of 215 000 tonnes during 1987-89. Kenya which currently accounts for 65 percent of Africa's tea exports would increase its availabilities from 145 000 tonnes to 228 000 tonnes in 2000.

Most of the increase in the volume of export availabilities would originate in Asia. India, the world's largest lea producer and consumer, would continue to expand its exports while satisfying growing domestic demand. The projected export availabilities would be 216 000 tonnes in 2000. Projected export availabilities for Sri Lanky would amount to 246 000 tonnes in 2000, a 1.5 percent rate of annual growth above the average export volume during 1987853.

China and Indonesia are also projected to increase export availabilities. China would continue the rapid growth of tea sales from the eighties, amounting to 180 000 tonnes by 2000 while Indonesia would attain a level of 195 000 tonnes.

Imports. The projected import requirements in 2000 are 1 227 000 tonnes which reflect an increase by 31 percent compared with the average actual black lea imports during 1987-89. Developing country importers would show a strong rise in demand, projected to reach 626 000 tonnes, over 50 percent above the average imports during 1987-89. Developed countries are projected to have small increases in imports of black tea. If the former USSR is excluded from this group, their imports by 2000 would be 413 000 tonnes, reflecting only a one percent annual growth rate from 1987-89 to 2000. In terms of quantity, the major importers are Pakistan, the area of the former USSR, the United Kingdom, Egypt and the United States.

Projected world black imports would increase by 2.9 percent to 1 263 000 tonnes by 2000 because of Uruguay Round tariff reductions and higher income. Most of the increase in imports would be in the developing countries, which account for more than 80 percent of the increase. Import requirements by Pakistan would rise from 204 000 tonnes to 210 000 tonnes in 2000.

Because of the significant expansion in consumption, almost tripling from 1972 to 1992, Pakistan would become the leading black importer in the world tea market in 2000.

The Uruguay Round is expected to boost imports into the Near East from 354 000 tonnes to 372 000 tonnes by 2000. Import demand in Egypt in 2000 would be 10X 000 tonnes, 4.6 percent above its projected levels prior to tariff reduction. Imports by the Islamic Republic of Iran would be 58 000 tonnes, implying a 4.6 annual growth rate between 1987-89 and 2000.

The simulations suggest that imports of black tea into the United Kingdom, the United States and Canada would amount to 135 000, 88 000, and 12 000 tonnes in 2000, respectively. There would be no changes in their projected import requirements as a result of the Uruguay Round because no trade restrictions are imposed on trade in black tea by these countries. The simulated import requirements for other developed countries reveal slight increases as they liberalize trade. Thus, the reductions in tariffs would induce the developed countries as a whole to increase imports from 601 000 tonnes to 608 000 tonnes by 2000.

Conclusions. The projections suggest that increases will take place in both world black tea production and consumption by 2000. Developing countries would account for most of the growth in consumption with an annual rate of 3.8 percent, and their share in the world total would rise from 63 percent in 1993 to 71 percent in 2000. Since demand for tea in developing countries depends largely on income, economic development of these countries will continue to have a major impact on the world tea economy.

The projections also suggest the continuation of an imbalance in the international market. Before allowing for the effects of the Uruguay Round the projected surplus of export availabilities as compared to import requirements was about 100 000 tonnes by 2000. The impact of the Uruguay Round on the world tea economy is expected to be small. Despite some increase in import demand, world market prices are expected to continue to be mainly influenced by the existence of large excess export availabilities. However, the projected gap between exports and imports would be reduced to 78 000 tonnes, as trade is liberalized. In addition, trade liberalization may offer some new opportunities for lea exporting countries. Most importing countries have tariffs on imports of small package black lea (not exceeding 3 kg) which have negatively influenced attempts to export value-added products. The Uruguay Round commitments mean that it should be possible for tea exporting countries to ship more small package black tea in the future and thus gain some value added.

Table 16: BLACK TEA - Commodity Balances, 1987-89 Average, 2000 Baseline and 2000 Uruguay Round Scenarios


Introduction. The world banana market is highly demand driven, and therefore, estimating demand is considered the crucial factor in projecting the global demand/supply balance. Import barriers are now minimal or nonexistent in most of the major banana importing countries, except the European Community (EC), and this situation is expected to continue. For instance, bananas are imported free of any duty or quota into the United States and Canada, respectively the world's second and fourth largest banana import markets. In Japan, the third largest market, banana imports are currently subjected to an ad-valorem tariff of 10 percent during the off-season for domestically produced fruits (mostly mikans) and 20 percent during the main marketing season (1 October to 31 March), under its GSP.

The only major development that would significantly affect demand at the world level, to the year 2000, is expected to occur in the EC, the largest global import market for bananas. Therefore the following analysis focuses on the new EC regime8. The new EC banana policy, which became operational on 1 July 1993, and is included in the Community's commitments under the Uruguay Round, grants preferential access to traditional banana supplying countries from Africa, Caribbean and Pacific (ACP) countries, signatories to the Lomé Convention. It also allows for the continued support of domestic production. In order to measure the impact of its commitments under the Round, the EC banana import regime was analyzed using a policy simulation model. The likely demand of each member state was estimated by including the new policy variables in the simulation, as well as income and price elasticities.

Uruguay Round commitments on banana imports. The harmonization measures introduced by the EC during the de-compartmentalization of its market into a single regime, are included as a tariff quota. The tariff quota imposed from I January 1995 was 2.2 million tonnes9 for imports from third countries (mainly dollar bananas, but non-traditional ACP supplies also qualify) levied at 75 ECU per tonne, or approximately 10 percent of the average retail price of dollar bananas in 1993. An import duty of 850 ECU per tonne (or 750 ECU per tonne for non-traditional ACP supplies) is imposed on quantities imported above the tariff quota. The EC is committed under the Round to reduce this tariff to 680 ECU per tonne by 2000. The regime also includes a duty free quota of 857 000 tonnes for traditional ACP supplies and an EC quota of 854 000 tonnes that would qualify for domestic support. For imports from third countries under the Framework Agreement annexed to the EC schedule of commitments, the global tariff quota of 2.2 million tonnes is divided up as follows: Costa Rica 23.4 percent, Colombia 21 percent, Nicaragua 3 percent, Venezuela 2 percent, Dominican Republic and other nontraditional ACP countries 90 000 tonnes (4.09 percent), and 46.51 percent for other third country suppliers.

Demand and supply prospects. World demand for banana imports is projected to grow by 1.4 percent annually, from 1993 to 2000. Although there is little change expected at the global level, 10.86 million tonnes under the Uruguay Round compared with 10.92 million tonnes projected in 1992 (without the changes due to the Round), a significant reduction is expected in the imports of the EC (more than 300 000 tonnes). This decline in volume in the EC would be only partially offset by increases in other markets.

Import requirements by developed countries are projected to increase by 0.9 percent annually, mainly due to the continued increases in traditional importing countries, while among developing countries imports are projected to remain small (10 percent of the global total), with an annual growth rate of 2 percent. Tariffication leading to lower tariffs would largely be responsible for this increase.

Taking into account policy initiatives such as the Framework Agreement on Bananas, export availabilities are expected to keep pace with demand at a growth rate of a little more than 1 percent annually to reach 11.3 million tonnes by 2000. This compares with a projection of 12.4 million tonnes made in 1992. The apparent surplus of 0.5 million tonnes (4 percent of exports) would be accounted for by quantities in transit, shrinkage and waste.

Impact of the Uruguay Round. As mentioned earlier, apart from the EC banana regime the impact of the Uruguay Round on international banana trade would be small. The duty free banana import regimes in the United States and Canada would continue. In Japan, MFN tariff rates will be cut from 40 and 50 percent for the two periods of the year to bound rates of 20 and 25 percent, respectively, by 2000. However, major supplying countries, Philippines and Ecuador, qualify for the lower GSP rates of 10 and 20 percent being imposed now10. It is expected that the current lower preferential tariff rates will continue to be applied to the bulk of its imports.

Other importing countries, which collectively accounted for about 25 percent of global imports in 1993, generally have tariffied their import regimes. Although a few of these importing countries have a potential for a larger growth in demand, concessions made under the Uruguay Round are not considered to be large enough to have a major impact. For instance, when the Republic of Korea began phasing out its quantitative restrictions in 1990, imports surged from 21 000 tonnes in 1990 to 314 000 tonnes in 1991. However, as tariffs remained high, levels subsequently fell to 146 000 tonnes by 1993. Under the Uruguay Round the Republic of Korea is committed to a base rate duty of 100 percent being hound at 90 percent in 2004.

In the EC, the 850 ECU duty levied on quantities imported above the tariff quota, is equivalent to almost 60 percent of the average retail price of dollar bananas in 1993. At this price level significant incremental increases in imports are not envisaged. Furthermore, in order to qualify for additional dollar banana shipments importers are required to obtain an equivalent amount from ACP/EC origins. Hence, the resultant increase in retail prices and fear of possible substitution with other fruits, are expected to prohibit growth in consumption. Projected levels of dollar, ACP, and EC banana imports by 2000 are indicated in Table 17.

Consumers in Germany, the largest consuming area in the EC market would be the most affected by the new regime, going from a duty-free arrangement to a tariffs level equivalent to 10 percent of the average import price of dollar bananas in 1993. Consumers in other member stales are expected to gain, slightly in Belgium, Luxembourg, Ireland, Denmark, and Netherlands, because of the lower tariff level (10 percent in the new regime compared to the 20 percent previously), and more substantially in the United Kingdom, France and Italy where imports were predominantly of ACP and EC origins under the old regime.

Producers in the EC and ACP countries are expected to benefit by US$22 per tonne and US$25 per tonne, respectively, from the new regime, while producers in the dollar countries would receive US$5 per tonne less for their bananas than the average price received during 1993. It must be mentioned that the simulation assumes that the ceiling placed on dollar imports in the EC would continue to lead to a diversion of supplies to other world markets, resulting in a decrease in prices. However, a realignment in the production sector or expansion in new markets could easily change this expectation.

Table 17: BANANAS - Commodity Balances, 1987-89 Average, 1993 Actual, 2000 Baseline and 2000 Uruguay Round Scenarios

Hides and skins

Supply. Global production of cattle hides and calfskins is projected to increase at 0.8 percent annually, the same rate of growth as recorded in the eighties, to reach more than 5.6 million tonnes by the year 2000. Although the overall effect of the Uruguay Round Agreement on bovine production is expected to be very small at the global level, it is likely to be important for some developed and developing countries where higher international prices for meat and for raw hides under the Round should sustain an expansion in bovine output. The faster growth in the developing countries compared with the past decade would be partly offset by a contraction in the developed countries.

The developing countries would continue to have more than two-thirds of the world's cattle, and are expected to increase their share of the world supply of' cattle hides. The share of developing countries' hide output in the world total, which was below 40 percent in the late eighties,, has been projected to expand to almost 50 percent by the year 2000. This reflects steadily improving, albeit low, productivity and continuing programmer to raise the standards of animal husbandry, and improve utilization of livestock products and techniques of flaying and curing. A more efficient collection of hides from fallen animals, especially in the Far East, and policies geared to improve off take rates, should also contribute to the additional supply of hides.

Greater growth in the output of bovine hides and skins is expected in Africa mainly under the pressure of rising demand for ruminant meat. Asia is predicted to continue to be a major source of hides in 2000, with its share increasing to about 20 percent of global production. In the Latin America and the Caribbean region, dynamic growth in meat production is expected to sustain a rapid increase in the output of hides. In total, the developing countries are expected to expand their output of bovine hides and skins by 2.8 percent annually to reach 2.8 million tonnes by the year 2000.

The slaughtering of cattle in the developed countries has been projected to decline, partly as a result of a contraction in herds. As a result, the domestic supply of bovine hides and skins would also fall, by about 0.8 percent annually to below 2.9 million tonnes. Output in North America and Oceania is expected to recover as higher international prices for meat resulting from the Uruguay Round should boost bovine meat production and the decline in hides anti skins output, which characterised the past decade, should be halted. By contrast, growth rates for meat production in western Europe are expected to be curbed by policies to limit livestock product surpluses and, given the continuing shift towards white meat consumption at the expense of bovine meat, cattle slaughterings are likely to decline and consequently in hide output is projected to recede from the levels of the late eighties. In eastern Europe and the area of the former USSR, structural changes and the reduction of consumer subsidies resulted in a contraction in demand for livestock products in the early nineties. Consequently, as cattle herds are expected to be reduced, slaughterings have been projected to recede from the levels reached in the late eighties and hide output is forecast to decline by 2.5 percent annually.

Demand for leather goods. Global demand for leather and leather products is projected to continue to expand in the nineties under the influence mainly of growing incomes and to a lesser extent of reductions in import tariffs for leather and leather footwear in major consuming countries. Trade weighted average tariffs in the developed countries, are likely to fall from 4.6 to 3.5 percent for leather and from 8.7 to 7.3 percent for leather products. While growth in demand is likely to be at a slower rate than in the eighties, it is projected to exceed the growth of production, pointing to some finning of prices. However, the projected rate of growth of demand varies between regions. This reflects different factors influencing leather usage such as consumer tastes and lifestyles. Globally, footwear is likely to remain overwhelmingly the principal and-use for hides and skins and, consequently, demand prospects for leather shoes would continue to determine to a large extent the demand for hides and skins.

In the developing countries demand for leather and leather goods is projected to rise in the nineties, under the impact of the Uruguay Round, at a faster rate than in the previous decade. Demand growth will be higher than in the developed countries, where it has been projected to slow to below 0.5 percent annually. Nevertheless, the developed countries will continue to account for more than 60 percent of global leather consumption in the year 2000. In particular, consumers in the more affluent countries are expected to continue to place increased emphasis on the quality of products. As a result, demand for leather goods at the fashionable, top quality end of the market is likely to increase in the developed countries, particularly in North America and in those western European countries with long established tanning and leather industries.

Demand for raw hides and skins. The tanning and leather products industry of the developing countries has undergone considerable change in the last two decades. The amount of raw hides anti skins produced and exported from these countries has been reduced, and increasing quantities of finished leather are being converted into leather garments, footwear and other leather manufactures. The growth in tanning and manufacturing capacity of some developing countries is expected to continue in the nineties, most notably in India, China, Pakistan and other countries with fast growing economies in the Far East and Latin America. The reduction of tariffs in consuming countries under the Uruguay Round for semi-finished and finished leather products, of about 20 and 15 percent respectively, would also contribute to this expansion. However these exporting countries are considered unlikely to replicate the fast growth rates achieved in the past decade, when their tanning and leather manufacturing capacity was in its infancy and provided greater scope for rapid expansion.

The volume of leather processing in the developed countries has declined in recent decades in the face of competition from developing countries with lower production costs and often less restrictive environmental laws and regulations. However, tanning and leather manufacturing capacity, especially in the shoe sector, is likely to expand in eastern Europe, where costs of production are lower than in western Europe.

Trade. As a result of the strong increase in processing in the developing countries over the past 20 years, trade between the developing countries has increased, with some, particularly in the Far East, importing raw material and exporting leather products.

In other cases, developing countries which produce raw hides and skins are increasingly processing this material to at least a partly finished stage, before export. At the same time, the processing activity in the developed countries has declined markedly, as imports are increasingly at a higher level of processing. Among the developed countries, the net exports of North America and Oceania are the result of a large volume of exported raw material, partly offset by imports of leather products such as shoes.

The decline of trade in bovine hides, skins, leather and leather products between developing and developed countries was reversed during the eighties. In the late seventies, the developing countries were net importers from the developed countries. However, by the late eighties, the developing countries had become net exporters of leather and leather products, and their net exports are expected to expand by 2000. Reduced customs duties for leather and leather products in the European Community and in other major consuming countries would further sustain this trend. In particular, exports from Latin America and Africa are projected to expand over the nineties. A number of countries in the Far East import raw material for processing and re-export, and this trade is also likely to expand. Among the developed regions, exports of hides from North America are projected to decline during the nineties, but the region will remain a major net exporter. Import requirements by the European Community are projected to continue to increase.

Contribution of the Uruguay Round Agreement to the projections. The impact of the Uruguay Round on projected global hides and skins production is slight. Only a small fraction of the total expected increase in global output of hides and skins in the period to 2000 is attributable to the Uruguay Round, although for some countries it is expected to have a more significant impact. New Zealand, Australia and United States are expected to increase their production largely reflecting increases in meat prices.

By contrast, in many European countries the effect will be negative.

Import demand for hides and skins is derived from market opportunities for leather and leather products and the existence of the processing capacity in the exporting countries. Growth in processing and manufacturing of hides and skins is proceeding more rapidly in developing than in developed countries. The Uruguay Round is expected to result in further increases in processing and manufacturing activity in these countries and this would be reflected in significant increases in trade by the year 2000. Imports of raw bovine hides by the developing countries are projected to increase by 12 percent while their exports of leather and footwear are projected to increase by about 30 percent each. These increased volumes combined with higher international prices are expected to lead to a considerable increase in the value of international trade of bovine hides and skins, leather and leather products. Developing countries are expected to add US$43 million and US$350 million to exports of leather and footwear respectively, although these will be partially offset by increases in imports of raw materials. Developed exporters are likely to increase their total export revenues from hides, leather and leather footwear by over US$60 million.

Table 18: HIDES AND SKINS - Commodity Balances, 1987-89 Average and 2000 Baseline, 2000 Uruguay Round Scenarios


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