Trade Perspectives©

29 January 2024

 

The EU updates the rules to obtain import licences for certain products, including husked Basmati rice: Protecting the EU rice market?

On 21 December 2023 the EU published Commission Delegated Regulation (EU) 2023/2835 of 10 October 2023 supplementing Regulation (EU) No 1308/2013 of the European Parliament and of the Council as regards rules on import in the sectors of rice, cereals, sugar and hops, which updates the currently applicable rules concerning the requirements that importers of rice, cereals, sugar, and hops must meet before being allowed to import those products into the EU. The new Regulation consolidates rules previously spread over 30 different pieces of EU legal instruments, also abolishing certain rules that had become obsolete. This article discusses the updated rules regulating the import of husked Basmati rice and how those changes could impact the EU rice market and rice trade with the EU.

The EU’s import licencing framework

In general terms, import licenses are not required for goods entering the EU. However, some exceptions apply, for example, for certain agricultural products imported under Tariff-Rate Quotas (hereinafter, TRQs), as well as certain agricultural products listed under Article 176(1) of Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products, such as rice, cereals, sugar, and hops, whose imports into the EU “may be made subject to the presentation of a licence”. While import licences are mainly used for administrative purposes to monitor imports of agricultural products subject to TRQs, licensing requirements designed with overly restrictive criteria could negatively affect international trade and contribute to market concentration by favouring certain economic operators.

The EU’s import licencing system is set out in Commission Delegated Regulation (EU) 2016/1237 of 18 May 2016 supplementing Regulation (EU) No 1308/2013 of the European Parliament and of the Council with regard to the rules for applying the system of import and export licences and covers, inter alia, the rights and obligations deriving from an import licence, as well as its transferability. Further details regarding the application process for obtaining an import licence are provided in Commission Implementing Regulation (EU) 2016/1239 of 18 May 2016 laying down rules for the application of Regulation (EU) No 1308/2013 of the European Parliament and of the Council with regard to the system of import and export licences. The new rules established by Commission Delegated Regulation (EU) 2023/2835 either supplement or deviate from the provisions outlined in Commission Delegated Regulation (EU) 2016/1237 and Commission Implementing Regulation (EU) 2016/1239.

A snapshot of the EU rice market

Rice in the EU market is categorised according to number of factors, namely the classification, the size of the grain, and the variety. Husked rice refers to rice where only the outer husk has been removed and where the rice is unpolished, which gives it “a nutty flavour and chewy texture”. Husked Basmati rice is a variety of long grain rice, mainly grown in India and Pakistan. The EU produces paddy rice (i.e., unmilled rice) of the two varieties of ‘Japonica’ short grain rice and ‘Indica’ long grain rice, but does not produce Basmati rice. The EU’s ‘Indica’ long grain rice industry faces competition from varieties of ‘Indica’ rice imported from Asian countries. According to EU statistics, the EU produces around 2.8 million metric tonnes of paddy rice, which meets around 60% of the EU’s demand, leaving a need for around 1.8 million metric tonnes of husked and milled rice imports. The type of rice imported (i.e., husked or milled) depends on prices and consumer preferences. Notably, studies show “a growing interest” in Basmati rice in Northwest Europe, “where rice is neither produced nor consumed traditionally”.

On 6 July 2023, during a meeting of the Civil Dialogue Group on Agricultural Markets - Rice, the European Commission (hereinafter, Commission) noted that, while EU total rice imports increased by 5% in 2022/23 compared to 2021/22, Basmati rice imports from India and Pakistan had decreased. Additionally, the Commission stated that the price of rice in the EU was “so high that the market attracts cheaper imports” leading EU millers to “import from third countries while some EU growers withhold their paddy in the hope to get a higher price for that in the future” and that, “after Brexit, Italian millers have moved into the basmati market”, which was immediately evident “in the statistics as Italy takes 14% of the imports from India”.

The EU regime for imports of husked Basmati rice

The new rules under Delegated Regulation (EU) 2023/2835 are of particular relevance for imports of husked Basmati rice. On the basis of Article 2(1) of Delegated Regulation (EU) 2023/2835, the new rules concern importers of husked Basmati rice of the following varieties: a) Basmati 217; b) Basmati 370; c) Basmati 386; d) Kernel (Basmati); e) Pusa Basmati; f) Ranbir Basmati; g) Super Basmati; h) Taraori Basmati (HBC-19); and i) Type-3 (Dehradun). These varieties of husked Basmati rice are grown in India and Pakistan and both countries are the main suppliers into the EU.

Ordinarily, imports of those varieties of husked Basmati rice are subject to the EU’s most-favoured nation (MFN) import duty of EUR 65 per metric tonne. However, imports of the varieties of husked Basmati rice listed in Delegated Regulation (EU) 2023/2835, originating from India and Pakistan, may be imported into the EU at zero-import duty on the basis of two dedicated Agreements with India and Pakistan, respectively. Under those Agreements, there is no limitation on the imported quantity. Specific arrangements were agreed upon by both countries to facilitate the implementation of the agreements, including the establishment of a system to verify the authenticity of the imported varieties and protecting “Basmati rice” as a Geographical Indication (hereinafter, GI), thereby recognising its specific geographic origin and related qualities. On 11 September 2020, the EU had published India’s application to obtain exclusive rights for the use of the name “Basmati” in the EU Official Journal. If granted, only recognised varieties of Basmati rice from India would be authorised to be marketed as “Basmati” in the EU. On 7 December 2020, the Rice Exporters Association of Pakistan (REAP) opposed India’s application and the issue is still pending.

Changes introduced by Delegated Regulation (EU) 2023/2835

On the basis of Article 2(2) of Delegated Regulation (EU) 2023/2835, imports of the covered varieties of husked Basmati rice will only “qualify for a zero rate of import duty under the conditions laid down in this Section and when accompanied by an import licence”. The requirements for importing husked Basmati rice into the EU were updated as regards the evidential proof accompanying an application for an import licence. According to Article 4 of Delegated Regulation (EU) 2023/2835, an importer applying for an import licence to import the covered varieties of husked Basmati rice into the EU must accompany that application with two pieces of evidence.

The first piece of evidence is proof that the applicant has exported from the EU or released for free circulation in the EU a minimum quantity of 25 metric tonnes of rice referred to in Article 1(2), point (b), of Regulation (EU) No 1308/2013 during one of the previous two calendar years. As Article 1(2), point (b) of Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products, refers to a wide range of rice classifications, including husked (brown) rice (which includes Basmati rice), husk (paddy or rough) and semi-milled or wholly milled rice, the evidence of trading in rice is not restricted to husked Basmati rice. Under the previous Commission Regulation (EC) No 972/2006 of 29 June 2006 laying down special rules for imports of Basmati rice and a transitional control system for determining their origin, the evidence required was “proof that the applicant is a natural or legal person who has, for at least 12 months, carried on a commercial activity in the rice sector and is registered in the Member State where the application is made”. The shift from a 12-month trading history under the repealed Regulation to a specific quantity requirement over the previous two calendar years alters the criteria for demonstrating commercial activity. This change could impact smaller businesses or those with shorter trading histories, potentially impeding their ability to obtain import licenses.

The second piece of evidence that an applicant for an import licence for husked Basmati rice must present is “a product authenticity certificate issued by a competent body in the exporting country, as made public by the Commission on its website”. While the requirement to present a product authenticity certificate already existed before, Delegated Regulation (EU) 2023/2835 provides that the product authenticity certificates would be made publicly available on the Commission’s website.

Raising barriers against new market entrants?

The slightly amended requirements for imports of Basmati rice have been criticised by experts in the husked Basmati rice trade from India, as particularly impacting non-EU millers with the intention to enter the EU market. The experts argue that the amendments are a protective measure in anticipation of the potential increased competition should the EU-India trade negotiations, which were relaunched in June 2022, and the negotiations on a standalone Agreement on Geographical Indications (hereinafter, GIs), be concluded in the coming years. During the meeting of the Civil Dialogue Group on Agricultural Markets - Rice of 6 July 2023, in response to some stakeholders’ concerns regarding rice imports from India and India’s application to protect ‘Basmati’ as a GI, the Commission noted that it was still examining the application and that “no further information” could be communicated while that process was ongoing.

At the same time, negotiations for a GI Agreement with India are ongoing, with three rounds of negotiations having been held so far, but the respective list of GIs to be protected have not been exchanged and discussed yet. The GI Agreement could provide India an avenue to fast track the recognition of ‘Basmati’ as a GI in the EU. Notably, the protection of certain products through GIs pursues the prevention of the misuse of names, which could mislead consumers as to the origin of agricultural products and their quality or characteristics, which provide added culinary and economic value. A 2021 study by the Commission found, inter alia, that the sales value of a product with a protected name is, on average, double that of similar products without such certification (see Trade Perspectives, Issue No. 12 of 18 June 2021). If Basmati rice were to obtain protection in the EU as a GI, its sales value could potentially increase. At the same time, if granted only to certain varieties cultivated in India, the GI would provide an important competitive advantage to economic operators in India over those in Pakistan (and elsewhere), who would no longer be allowed to market their products under the Basmati name.

Essentially, the new requirements could contribute to market concentration, limiting competition and potentially disadvantaging smaller economic operators on the EU rice market, given that, during the period of achieving the required threshold, importers would not yet be able to obtain an export license to import any husked Basmati rice listed in the Regulation.

Adapting to the changing dynamics of importing husked Basmati rice

The changes introduced by Delegated Regulation (EU) 2023/2835 reveal complex regulatory requirements to obtain import licences for the covered varieties of Husked Basmati rice with potential implications for businesses and related trade dynamics. Economic operators intending to import into the EU the covered varieties of Husked Basmati rice and stakeholders interested in entering the EU rice market should diligently assess the commercial implications of the new rules and seek expert advice to identify and articulate their concerns.

 

Growing trade relations between ASEAN and Latin America: Singapore recently signed the Mercosur-Singapore Free Trade Agreement

On 7 December 2023, at the 63rd Summit of Heads of State of Mercosur and Associate States held Brazil, Singapore and the Mercosur countries (i.e., Argentina, Brazil, Paraguay, and Uruguay) signed the Mercosur-Singapore Free Trade Agreement (hereinafter, MCSFTA). Negotiations for the MCSFTA were launched in 2018 and were substantially concluded in July 2022 (see Trade Perspectives, Issue No. 9 of 8 May 2023). The MCSFTA is Singapore’s first preferential trade agreement with Mercosur countries and Mercosur’s first preferential trade agreement with a Southeast Asian country. Following the signing of the MCSFTA, Singapore and the Mercosur countries are now embarking on their respective domestic ratification processes to bring the Agreement into force. This article provides an overview of the Singapore-Mercosur trade relations and discusses the commercial benefits of the MCSFTA. The article also reviews the benefits of the MCSFTA for ASEAN-Mercosur trade relations. 

Singapore’s linkages to Latin America

The signing of the MCSFTA marks a significant milestone in Singapore’s trade relations with Mercosur and, according to Singapore’s Minister of Trade, Gan Kim Yong, “strengthens Singapore’s growing trade-enabling architecture with Latin America”. Singapore currently has bilateral preferential trade agreements with several Latin American countries, namely: 1) The Costa Rica-Singapore Free Trade Agreement (SCRFTA); 2) The Panama-Singapore Free Trade Agreement (PSFTA); and 3) The Peru-Singapore Free Trade Agreement (PeSFTA). In January 2022, Singapore and the Pacific Alliance countries (i.e., Chile, Colombia, Mexico, and Peru) signed the Pacific Alliance-Singapore Free Trade Agreement (PASFTA), which has been described as a “landmark moment” for Singapore’s partnership with Latin America. The PASFTA complements Singapore’s existing agreements with several Pacific Alliance countries, including the Trans-Pacific Strategic Economic Partnership and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CP-TPP).

Mercosur as an important trading partner for Singapore and the ASEAN region

The ten ASEAN Member States (i.e., Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) are important trading partners for Mercosur. According to the ASEAN Secretariat, in 2023, the two-way trade between ASEAN and Mercosur had a total value of USD 33.3 billion. In 2022, the International Trade Centre’s Trade Map (i.e., an online database on international trade statistics) shows that Mercosur’s exports to ASEAN had a total value of USD 32 billion and that Singapore was the third main ASEAN Member State exporting to Mercosur after Thailand and Viet Nam, with a total export value of USD 2.2 billion. During the same year, Singapore was the main export destination within ASEAN for Mercosur’s exports, with a total export value of USD 8.5 billion. Due to the increasing trade between ASEAN and Mercosur, on 16 December 2021 Indonesia and Mercosur announced the launch of trade negotiations, but no formal negotiation rounds have so far been held. A source within the Government of Indonesia revealed that the negotiations would likely start in 2024, after Mercosur has concluded its ongoing trade negotiations with the EU. In 2023, Viet Nam also expressed its interest in negotiating a preferential trade agreement with Mercosur.

In 2022, Singapore’s bilateral trade with Mercosur had a total value of USD 10.2 billion, which accounted for 45% of Singapore’s total trade with countries in Latin America. The main products exported from Mercosur to Singapore are agricultural products, such as poultry, pig meat, and beef, as well as minerals, such as ferroalloys and iron ores. The main products exported from Singapore to Mercosur include insecticides, integrated circuits, medicines, and vessels. There is also an increasing economic presence of Singaporean companies in the Mercosur countries, operating in areas such as agri-business, energy, manufacturing, logistics, and infrastructure. As of 2023, there were more than 100 Singaporean companies with a local presence in Mercosur.

The Mercosur-Singapore Free Trade Agreement: Facilitating trade flows

The MCSFTA covers the common areas of modern PTAs, including chapters on E-commerce; Government procurement; Micro, small and medium enterprises (MSMEs); and Competition Policy. While the official text of the Agreement has yet to be published, both Parties published a press release that provides an overview of the relevant chapters. A key focus of the MCSFTA is to facilitate trade flows through simplified export and import procedures. Beyond that, the MCSFTA seeks to encourage greater transparency in, and simplification of, Customs procedures and cooperation between Singapore and Mercosur in “areas of mutual interest”, which include Small and Medium Enterprise development, competition law enforcement, electronic commerce (e-commerce), and cybersecurity.

With respect to trade in goods, Singapore committed to “eliminating tariffs on all exports from Mercosur” upon the entry into force of the MCSFTA. In return, Mercosur will gradually eliminate import tariffs for 96% of products originating in Singapore over 15 years, offering “immediate tariff free access for around 25% of products”. It is estimated that the MCSFTA would increase Singapore’s exports to Mercosur by 15% and its imports from Mercosur by 10%. Trade data from the International Trade Centre shows that Singapore still has significant untapped export potential to the Mercosur countries, with an estimated potential of additional exports valued at USD 1.1 billion just to Brazil, mainly for additional exports of machinery and electronics products. Meanwhile, the Mercosur countries’ untapped export potential to Singapore is estimated at USD 991 million, mainly concerning additional exports of minerals and agricultural products. Given the more immediate removal of tariffs by Singapore, economic operators in the Mercosur countries would be able to tap into that potential market, which is also a gateway to the rest of ASEAN, while economic operators in Singapore would need to determine whether their products fall within the 25% of products immediately benefitting from the tariff liberalisation at entry into force.

With respect to rules of origin, the MCSFTA will allow economic operators to benefit from more flexible rules of origin for goods to qualify for preferential tariffs when imported by a Mercosur country. The MCSFTA’s chapter on Customs Procedures and Trade Facilitation provides “simplified procedures and increased transparency, for more efficient clearance of goods”.

The e-commerce chapter

Singapore is known as the leading ASEAN Member State when it comes to agreements related to digital trade. To date, Singapore has concluded four digital agreements and bilateral partnerships and has concluded 14 bilateral trade agreements containing dedicated chapters on e-commerce, including trade agreements with Australia, China, the EU, and India. According to the Government of Brazil, the chapter on e-commerce in the MCSFTA is “the most comprehensive framework for this modality of commerce ever agreed by Mercosur with an extra-regional partner”. More specifically, the e-commerce chapter covers provisions on electronic authentication, paperless trading, as well as on consumer protection. While the details of the e-commerce provisions remain unclear, the MCSFTA appears to fall short of the PASFTA, which included commitments on cross-border data flows and the location of computing facilities (i.e., companies that sell products with embedded software would not be obliged to release their source code, except for legal reasons). The PASFTA also provides safeguards for the protection of personal information, including commitments on unsolicited commercial messages (e.g., spam messages).

Other areas of mutual interest

Businesses, especially micro, small, and medium enterprises in Singapore and Mercosur, will also benefit from the MSME chapter of the MCSFTA. In general terms, the chapter will facilitate cooperation in capacity building, notably through Government-to-Government collaboration, to help MSMEs develop entrepreneurial skills, competitiveness and expand their products and/or services by, inter alia, facilitating their digital transition.

With respect to investments, the MCSFTA will provide investors from both sides with enhanced “stability and predictability”, allowing businesses and investors to make use of the MCSFTA in increasing their investments and presence in the other party. At the end of 2021, Singapore’s foreign direct investment in Mercosur countries had a total value of USD 1.2 billion.

Falling short on sustainability commitments?

When compared with other ‘modern’ trade agreements, such as the EU-Singapore FTA and EU-New Zealand FTA, the MCSFTA does not appear to include any provision on Trade and Sustainable Development (TSD) or social and environmental commitments, despite the growing relevance of such clauses in recent trade agreements. For instance, under the EU-Singapore FTA, both parties reaffirmed their commitments under international agreements on workers' rights and environmental protection.

Benefitting from the MCSFTA

The MCSFTA has received positive reactions from businesses in Singapore and Mercosur. According to the Group Chief Executive Officer of Oceanus Group Limited (i.e., an aquaculture company in Singapore), Mr. Peter HK Koh, the MCSFTA is “an important initiative to bring the MERCOSUR markets closer to Asia” and would “not only facilitate more effective cross-border trade, but also contribute to greater food resilience in Asia”. As Singapore currently imports more than 90% of its food, the MCSFTA could enhance market access for food and agricultural products to Singapore from Mercosur countries. Companies from Mercosur could make use of the trade facilitation tools agreed under the MCSFTA, such as facilitated Customs procedures, to increase their market share and presence in Singapore for food and agricultural products.

Towards a deeper ASEAN trade relationship with Mercosur?

Singapore’s position as Mercosur’ gateway to Southeast Asia has become more pronounced with the signing of the MCSFTA. According to Brazil’s Vice-President, Geraldo Alckmin, the MCSFTA would “be Mercosur’s first free trade agreement in over ten years and the first with an Asian country” and could strengthen “economic ties between Brazil, Mercosur, and the Asian region, creating opportunities for greater diversification of exports and investments”. The MCSFTA would also open doors for the entry of Mercosur’s exports to the ASEAN region, as Singapore is an important trade hub in ASEAN. The MCSFTA reflects Singapore’s commitment to expand its global trade network and to position itself as the key trading partner for Mercosur countries in the ASEAN region. Interested stakeholders should review the commitments contained in the MCSFTA and its tariff concessions once the full text of the Agreement is available.

 

The European Parliament adopts a Resolution on the Implementation of the Nutrition and Health Claims Regulation

On 18 January 2024, the European Parliament adopted a Resolution on the implementation of Regulation (EC) No 1924/2006 on nutrition and health claims made on foods. The Resolution calls on the European Commission (hereinafter, Commission) to, in particular: 1) Provide updated guidance on how to address marketing practices circumventing Regulation (EC) No 1924/2006 of the European Parliament and of the Council on nutrition and health claims made on foods (hereinafter, NHCR); and 2) Set up, together with EU Member States, a knowledge network to support the Working Group on Nutrition and Health Claims in order “to facilitate interpretation gaps among Member States and address enforcement disparities”.

EU regulatory framework on nutrition and health claims

The NHCR governs the use of nutrition and health claims in the labelling, presentation, and advertising of foodstuffs marketed in the EU. The NHCR establishes rules that food business operators must follow when they intend to advertise a particular beneficial effect of their product in relation to nutrition or health. The objective of the NHCR is to ensure that any claim made in the presentation or advertising of foodstuffs marketed in the EU is clear, accurate, and based on scientific evidence. According to Article 2(5) of the NHCR, a health claim means “any claim that states, suggests or implies that a relationship exists between a food category, a food or one of its constituents and health”. According to Article 2(4) of the NHCR, a nutrition claim means any statement suggesting or implying that a food has particular beneficial nutritional properties in terms of the energy or nutrients that it provides..

The REFIT evaluation in 2020

On 20 May 2020, the Commission published the evaluation of the NHCR under the Commission’s Regulatory Fitness and Performance (hereinafter, REFIT) Programme, which aims at consolidating better law-making procedures, simplifying EU law, and reducing administrative and regulatory burdens. Since its adoption in 2006, the NHCR has remained incomplete. The REFIT evaluation, published in May 2020 alongside the EU’s Farm to Fork strategy (see Trade Perspectives, Issue No. 10 of 22 May 2020), found that there are gaps in the NHCR arising from the non-implementation of nutrient profiles, in relation to health claims on plants and their preparations, and from the non-harmonised nature of the current general regulatory framework applicable to plants and their preparations used in foods.

Nutrient profiles

On the basis of Article 4(1) of the NHCR, the Commission was required to adopt, by 19 January 2009, “specific nutrient profiles, including exemptions, which food or certain categories of food must comply with in order to bear nutrition or health claims and the conditions for the use of nutrition or health claims for foods or categories of foods with respect to the nutrient profiles” (see Trade Perspectives, Issue No. 12 of 17 June 2016). In simple terms, nutrient profiles are thresholds of nutrients (i.e., maximum levels of nutrients, such as saturated fats, salt and/or sugars) above which nutrition claims are restricted and health claims are prohibited.

The objective of such nutrient profiles is to avoid a situation in which nutrition or health claims would mask the overall nutritional values of a food product, which could mislead consumers when trying to make healthy choices. The specific objective pursued by nutrient profiles, which is to prevent a positive health message on foods that are high in fats, sugars and/or salt content, is still relevant today, as, in the absence of nutrient profiles, consumers continue to be exposed to foods bearing claims, but which are in fact high in fats, sugars and/or salt. The REFIT evaluation concluded that a “level playing field between food operators has not been achieved because some operators have reformulated their products, possibly in preparation for the establishment of nutrient profiles, while other operators have not, creating unfair competition”.

The European Parliament’s Resolution

The European Parliament’s Resolution on the implementation of Regulation (EC) No 1924/2006 on nutrition and health claims made on foods of 18 January 2024, notes that its 2021 Resolution on the Farm to Fork Strategy explicitly welcomed the announcement of a legislative proposal to establish nutrient profiles in order to prohibit the use of nutrition and health claims on foods high in fat, sugar and/or salt or generally unhealthy foods. In the context of the Farm to Fork Strategy and the planned revision of Regulation (EU) No 1169/2011 on the provision of food information to consumers, a legislative proposal for the establishment of nutrient profiles was announced by the Commission for 2022, but has not yet been presented. Given that the end of the current legislative term of the European Parliament is approaching, it is unlikely that the Commission would still present such a Proposal before the summer. The European Parliament recalls that, “in the absence of nutrient profiles, claims can stress a positive aspect of an overall unhealthy product or a product that exceeds the thresholds for specific nutrients, such as fat, sugar and salt”, pointing out that “many food products, including some marketed towards children, continue to use health and nutrition claims despite containing high levels of nutrients of concern”.

In its Resolution, the European Parliament notes that “effective information tools, such as front-of-pack nutritional labels, support citizens in making healthier food choices and avoiding unhealthy consumption of food high in salt, fat and sugar” and that it had, already in 2021, “called on the Commission to ensure the development of mandatory and harmonised EU front-of-pack nutritional labelling”. In this context, the European Parliament regrets the delay of the proposal for a revision of Regulation (EU) No 1169/2011 with regard to the development of front-of-pack nutrition labels and “asks the Commission and the Member States to encourage and help consumers to make informed, healthy and sustainable choices about food products by adopting, as soon as possible, a mandatory and harmonised EU front-of-pack nutritional label that is developed based on robust, independent scientific evidence and demonstrated consumer understanding”.

The NCHR establishes that health claims made on foods, including plants, are only to be authorised after a scientific assessment of the highest possible standard is conducted by the European Food Safety Authority (hereinafter, EFSA). In 2009, in the context of the scientific assessment for the establishment of the list of permitted ‘health claims other than those referring to the reduction of disease risk’ falling under Article 13 of the NHCR, no health claim on plant substances used in foods (also referred to as “botanicals health claims”) received a favourable assessment by the EFSA, which led to a suspension of the authorisation procedure (see Trade Perspectives, Issue No. 14 of 10 July 2015).

The European Parliament disapproves “the continued suspension of the evaluation of claims on botanicals and points out that there are significant legal concerns about the continued use of the ‘on-hold’ claims under the transitional measures of the NHCR”. The European Parliament highlights that the ‘on-hold’ list of 2,078 health claims, established by the Commission in 2012 relating to plant substances, mainly due to the absence of human intervention studies that led to the suspension of the EFSA assessment and authorisation procedure in 2010, results in “‘on-hold’ health claims – both those negatively assessed and those not yet reviewed”. The European Parliament further notes that such ‘on-hold’ health claims “may still be used on the EU market according to the transitional measures set out in the NHCR, until a decision on the ‘on-hold’ list is taken”.

The European Parliament also states that “the legislation on botanicals in foods and food supplements is not harmonised at EU level”, that ”Member States either have positive, negative or no lists of botanical substances permitted in foods”, and that the “classification of botanicals as either food or medicine lies within the competence of each individual Member State” (see, in this context, Trade Perspectives, Issue No. 8 of 20 April 2018). Since the “purpose of a medicinal product is to treat or prevent disease in human beings and food supplements are intended for consumers who do not have immediate medical needs”, the European Parliament considers that “it is therefore important to maintain a clear distinction between food and medicine”.

The European Parliament urges the EU Member States to “collaborate effectively on establishing a coordinated approach on botanical food supplements and calls on the Commission to provide guidance in this regard; calls on the Commission and the Member States to establish, without delay, an EU-level negative list of botanicals used in food, basing this on their toxicity or adverse health effects already identified in Member States”. The European Parliament also calls on the Commission to “provide updated guidance on how to deal with marketing practices that are used to circumvent the NHCR” and calls for the Commission and the EU Member States to “set up a knowledge network aimed at supporting the working group on nutrition and health claims” and points out that “this network should help to facilitate the exchange of best practices, bridge interpretation gaps among Member States and address enforcement disparities”.

“Consumers continue to be exposed to unauthorised and misleading claims”

Before the adoption of the Resolution, Member of the European Parliament Tilly Metz (Group of the Greens/European Free Alliance), the Rapporteur for this issue in the European Parliament, stressed that the NHCR has “been enforced for more than 15 years”, and “it has significantly contributed to protecting consumers from false and misleading health and nutrition claims on food”. MEP Metz further noted that “still today, consumers continue to be exposed to unauthorised and misleading claims”, which she attributes to the fact that “15 years after the regulation came into force, the foreseen nutrition thresholds for such claims have still not been established”.

Towards better implementation?

The European Parliament’s Resolution reminds the Commission of two legislative initiatives, one on nutrient profiles and one on front-of-pack nutrition labels, which have often been announced, while no proposals have seen the light. These initiatives are not only important for consumer protection purposes, but also to achieve a level playing field between food operators, given that some operators have already reformulated their products, possibly in preparation for the establishment of nutrient profiles, while other operators have not, creating unfair competition.

The European Parliament’s call to establish an EU-level negative list of botanicals used in food, based on the experience in EU Member States, appears to be another important matter where a level playing field for food operators and legal certainty is needed. Further Commission guidance on the NHCR is needed for more legal certainty and, in general, better coordination with the EU Member States is always welcome to ensure the functioning of the EU Single Market.

 

Recently adopted EU legislation

Trade Law

 

Customs Law

 

Trade Remedies

 

Food Law

 

Ignacio Carreño, Joanna Christy, Tobias Dolle, Alya Mahira, Stella Nalwoga, and Paolo R. Vergano contributed to this issue.

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