Common use of Beef Clause in Contracts

Beef. EU beef production and prices have shown stable patterns in the last 5 years. Thanks to an increase in exports to existing partners, coupled with the opening of new key markets, overall beef exports are projected to increase by 15% in 2019, consolidating the EU's position as a net exporter of beef. These patterns have coexisted with stable annual imports from Mercosur and the gradual phasing in of a significant quota for high quality fresh beef since 2009, agreed to settle a World Trade Organization dispute with the United States. The EU currently imports around 200,000 tonnes of beef cuts every year from Mercosur countries. These imports cater mostly for the high value market segment, dominated by European production and facing increasing consumers' demand. This is why more than a quarter of this amount (around 45 000 tonnes of "fresh" beef and a further 10,000 tonnes of frozen beef) enters the EU market despite being subject to a 40%-45% duty. Under the agreement, the EU will allow 99,000 tonnes of beef (55% of which is for "fresh", high quality beef, and the remaining 45% for "frozen" beef) to enter its market with a 7.5% duty. This represents 1.2% of the total European beef consumption (8 million tonnes every year). It will take 5 years until this amount is reached. This gradual phasing in period will provide the necessary time for European beef producers to adjust to the new market reality. It is expected that, rather than creating an equivalent increase in imports, one of the effects of the new quota for "fresh" beef will be to replace some of the imports that are already taking place. In addition, the agreed amounts will not lead to a significant increase in production on the Mercosur side. Brazil alone already produces 11 million tonnes of beef every year and the agreed quota of 99,000 tonnes will still be split among the four countries. EU poultry consumption grew steadily from 11 million tonnes in 2005 to more than 14 million tonnes in 2018. That is average consumption growth of over 230,000 tonnes per year. Currently the EU imports 800,000 tonnes of poultry every year, of which over half comes from Mercosur. In parallel, EU exports are at 1.6 million tonnes, giving the EU a stable trade surplus of 800,000 tonnes. Under the agreement, the EU will allow a quota of 180,000 tonnes to be imported duty-free. This amount will be phased-in over five years after the entry into force of the agreement. This volume amounts to far less than one year of observed average long-term consumption growth and corresponds to 1.2% of current consumption. In addition, there is a pronounced complementarity between imports and domestic production, since EU consumers have a strong preference for breast meat, whereas consumers in other markets prefer thighs for both cultural and economic reasons. Over the years the EU poultry sector has demonstrated its ability to adjust to new market circumstances and enhanced competition by boosting efficiency gains and innovation. The EU was in 2018 a large net exporter of sugar with exports of 2.1 million tonnes. For its sugar exports to the EU, Brazil has until now been using a tariff quota allocated under the EU’s WTO schedule with an in-quota duty. With the agreement, 180,000 tonnes of sugar for refining will be allowed into the EU duty-free under this existing quota. No new sugar The agreed amounts cover a volume accounting for 1% of EU sugar consumption, which is around 19 million tonnes and remains stable. A duty-free quota of 450,000 tonnes will be opened for ethanol to be used by the chemical industry. A further quota of 200,000 tonnes with an in-quota rate of 1/3 of the current high duty (up to €19/hectolitre) will be opened for all other uses. Both amounts will be phased in gradually over 5 years. The smaller quota can be used for the fuel segment of the market, which represents by far the biggest chunk of the EU ethanol consumption: out of the 6 million tonnes of ethanol consumed every year in Europe, 4 million are used in fuel. As for the sub-quota for chemical uses, the European bioplastics and biochemical industry is currently struggling to expand because of lack of access to bioethanol, the main input for production, at a competitive price, in part because of the focus of EU production on fuel uses. The larger sub-quota, which is reserved for the less sensitive chemical uses segment, is therefore expected to have a positive job creation impact in the EU. The decisions concerning ethanol must also be seen in the context of Brazil’s status as one of the world’s two major producers and exporters of bioethanol, along with the United States. Together, the two countries account for 85% of world production.