Levy-removal plan for agro products unrealistic - FOI

The Federation of Industry said yesterday it did not agree with the government's published programme for the removal of protective levies on agro-food, adding it would adversly affect the majority of its members in the food, beverage and tobacco industrial sectors.

The federation said in a statement that the government's plans for liberalising the food, beverages and tobacco sectors would harm the industry's chances of restructuring and retaining its position on the local market, as well as venturing into the export market.

"The FOI believes the government is clearly making concessions to the European Union by embarking on a programme removing protective levies, starting from September 2002, without getting from Europe any immediate gain for local industry.

"Local manufacturers do not even have the comfort of technical or financial assistance, while the EU has not, as yet, granted tariff-free market access to Maltese industry on the same products listed in the schedules appearing in the Legal Notices issued in August, that have partly removed protective levies on competing imports from the EU."

The FOI said that to further aggravate matters for Maltese industry, EU manufacturers currently exporting products to Malta which were similar to, or substitutes for, local food, beverage and tobacco products, had obtained export subsidies from the EU and could afford to lower even further the prices of their products in the Maltese market.

"As a result of the reductions of protective levies, these EU manufacturers would be able to further intensify the unfair competitive edge they currently hold in Malta," the FOI said.

The federation said that until a few months ago it was given to understand that the removal of levies with regard to certain products falling within the agro-industry would take place after EU membership.

"The timeframe now being proposed by the government for the removal of levies is inadequate and unrealistic when viewed in relation with the timeframes required for enterprises to receive the promised technical and financial assistance and to implement their restructuring plans.

"There is also hardly any time allowed to permit gradual market entry into EU countries, and for any brand introduction exercise in the EU single market. This is already a tough proposition given the economies of scale and massive branding strengths of EU competition, encountered both in EU countries and in the Maltese market."

The FOI said the recent legal notices relating to the levy dismantling programmes on the agro-food sectors "do not appear to have considered the structural problems caused by Malta's insularity and double freight costs on exports".

Moreover, the government had not implemented any of the FOI's recommendations to bring about a reform at Malta's ports so that proper independent regulation is exercised, unified port management is implemented and restrictive practices are eliminated thus leading to a drastic reduction of port handling and transport costs.