Caobisco ‘highly concerned’ about EU trade deal with Japan

14-Dec-2017 - Last updated on 14-Dec-2017 at 15:43 GMT

Non-EU sugar limit based on weight makes Japan trade deal meaningless for EU candy producers, says Caobisco ©GettyImages/batak1

European confectionery association Caobisco fears rules of origin on sugar may harm its export competitiveness to Japan despite improved market access through a new trade deal.

The EU signed an Economic Partnership Agreement with Japan on Friday last week (December 8).

The deal gradually removes custom duties on most EU confectionery entering Japan over 10 years- with the exception of some chocolate products.

Tarrifs had been as high as 30% for some types of chocolate

But only chocolate and biscuits containing a maximum of 30% non-EU sugar based on weight will beneift from these these preferential export terms to Japan, while the threshold is 40% for sugar confectionery.

This is contrary to many other EU Free Trade Agreements that set a value limit of 30% of non-EU sugar in confectionery.

No deal better than bad deal, says Caobisco

Caobisco – whose members include Mars and Mondelēz – said weight criteria, rather than rules based on value, represents a trade barrier, as manufacturers cannot always prove the volumes of non-EU sugar in their products.

“With the end of sugar production quotas, Caobisco welcomes the increase of EU sugar production and has always indicated its preference to source sugar in the European Union.

“However, the sugar sold to Caobisco manufacturers is in a significant number of cases not accompanied by a supplier declaration and thus our exporters are unable to prove the volume of non-originating sugar to meet the origin rules,” it said in a release.

Muriel Korter, economic affairs director at Caobisco told ConfectioneryNews: "The manufacturers have demanded sugar suppliers to give them declarations - but not all of them get a supplier declaration. A significant number don't."

The trade body argues this puts small and medium-sized enterprises in particular at a disadvantage.

“Without a change to the current situation, Caobisco questions if a ‘no deal’ would not be more beneficial for the sector than a bad deal," said the association in its release.

caobisco weight rules — Source: Caobisco

Japan’s confectionery market

Caobisco members produce 12m tons of chocolate, biscuits and sugar confectionery each year – 17% of which is exported outside the EU.

Local players - Meiji in chocolate and Asahi in sugar confectionery – lead Japan’s confectionery market, according to Euromonitor International.

Retail value sales of chocolate confectionery in Japan are expected to grow at a compound annual growth rate (CAGR) of +4% from 2016 to 2021 to reach around $6bn.