Spicing up EU-Indonesia food trade relations – The EU adopts emergency measures for Indonesian nutmeg

Today we have a most welcome return on our blog: Francesco Montanari, food lawyer in Lisbon and senior associate at Arcadia International, examining the EU emergency measures imposed on Indonesian nutmeg import.

Early this January, the European Union (EU) has decided to step up the conditions for importing Indonesian nutmeg into its market. Nutmeg is a high-value dried spice that derives from trees of the genus Myristica, plants that typically grow in a few Asian countries. Nutmeg has been widely used in European cuisine since the Middle Age for various purposes. According to some sources, its value increased exponentially during the 16h century, when belief had it that it could help preventing the plague. Currently, nutmeg sourced from Indonesia accounts for nearly 80% of all EU imports of that product, with Netherlands, Germany and Italy being the three top importers.

Indonesian nutmeg has been already under EU surveillance for some time mainly because of aflatoxins contamination. Indeed, it has been subject to reinforced checks at EU borders in the context of Regulation (EC) No 669/2009 since July 2012. A relatively high number of notifications (20) reported by EU Member States’ control authorities through the Rapid Alert System for Feed and Food (RASFF) over the period 2009-2012, in addition to some shortcomings emerging from an audit performed by the Food and Veterinary Office of the European Commission had justified an increase in border surveillance back then.

Over three years later, non-compliance levels reported in relation to Indonesian nutmeg do not seem to have substantially improved. A quick search in the RASFF database, in fact, shows that the number of RASFF notifications concerning this product have not decreased over the last three years, accounting for 23 border rejections.

It is against this background that the European Commission has recently decided to stiffen the import requirements applying to nutmeg with Indonesian origin.

The Commission has done so by adopting Regulation (EU) No 2016/24 whose provisions amend and supplement, among others, Annex I to Regulation (EU) No 884/2014, an EU emergency measure setting special import conditions for a number of imports presenting a high risk of aflatoxin contamination.

Applicable as of 2 February 2016, the new import requirements applicable to nutmeg from Indonesia imply that, in addition to the obligation of pre-notify the arrival of their consignments, the concerned business operators will have to provide the control authorities at EU borders also with:

  • a valid health certificate verified, signed and stamped by an authorised representative of the Indonesian Ministry of Agriculture for food, attesting that the consignment in question has been subject to sampling and analysis in conformity with EU legislation; and
  • an analytical report detailing the results of the tests performed in the country of origin in compliance with the maximum levels set by Regulation (EC) No 1181/2006.

At their arrival in the EU, consignments will still be subject to 100% documentary checks by national control authorities and to a lower frequency (20%) in case of identity and physical checks. Business operators sourcing nutmeg from Indonesia should be aware that, under the import regime set by Regulation (EU) No 884/2014, identity and physical checks may be not always performed at EU borders, but, based on the choice made by each Member State, be carried out at designated premises located either at an external borders or in-land.

Whilst the introduction of stricter import requirements for Indonesian nutmeg may be justified in the light of the overall unsatisfactory compliance level observed over time, the impact that the newly introduced measures will have on the bilateral trade relations between the EU and the Asian country remains to be seen.

In fact, over the last few years, the EU has been particularly active in voicing its concerns over the compatibility of certain sanitary and phytosanitary requirements set by Indonesia with the applicable international trade rules (e.g. BSE, avian flu and import requirements for plants and plant products), although with limited success. This considered, the import conditions that the EU recently adopted for Indonesian nutmeg risk being an additional political irritant in the context of the already tense trade talks between Brussels and Jakarta.

Portugal – Internationalisation of agri-food sector bears fruit

“Thank you again to my friend Francesco Montanari, Food Law consultant in Lisbon, for this insight on Portuguese economic situation.”

One year has passed since when I moved to Lisbon in search of a better climate and new personal and professional challenges. I landed in Portugal probably at the peak of the economic crisis the country is currently living through with tax pressure expected to mount and further budgetary cuts announced. I vividly remember being struck by seeing families shopping in retail stores with a calculator in their hands. That really helped me understand the extent of the crisis more than any figure or financial report.

Recently, the country’s economy has sent some positive signals of recovery. Interestingly, the agri-food sector is one of the industry segments that is contributing more to the growth of the Portuguese economy. In particular, agri-food exports increased, overall, by 7,3% in 2013 as opposed to previous year, while Portuguese exports out of the EU grew even higher (12,1%). These positive trade results draw on a solid public-private partnership that has seen the Portuguese government joining forces with agro-food business operators and with the ultimate objective to overcome technical barriers maintained by non-EU countries on sanitary and phytosanitary grounds.

In this context, over the period 2012-2013 Portugal has resumed or reinitiated negotiations with 51 potential trade partners outside the EU area, including major players such as China, Russia, Brazil, South Africa as well as African and Middle-East countries. Over the same period, 114 different food products have obtained the required approval and certification for export, ranging from fishery products to pork meat, milk and fresh produce. The export value for certain markets is also noteworthy. In particular, the following markets stand out as key markets for Portuguese food and agriculture products:

  • Brazil: € 288, 4 million (export value for 2013) (main exports: ornamental birds, fish, horses, bovine semen and embryos) ,
  • Russia: € 45 million (honey)
  • Japan: € 38,5 million (pork meat)
  • South Africa: € 36,3 (strawberries, horses and horses semen)
  • China: € 35 million (fishery and aquaculture products, milk and derived products)
  • Morocco: € 26,2 million (bovine meat, fishery, aquaculture products and milk products)
  • Venezuela: € 25,3 million (meat, fishery products, milk products and pears)
  • Algeria: € 17,1 million (bovine animals, bovine meat, honey) (Source: Expresso Economia 18 January 2014)

The list above makes clear that Portugal has designed an export strategy that is tailored-made for the each market being targeted. Although singling out export opportunities primarily lies with food businesses, national competent authorities, including the network of Portuguese embassies operating abroad, have played a major role in facilitating the progressive removal of technical barriers to Portuguese exports. One may well regard the public-private partnership that Portugal has developed over the last couple of years as a far-reaching policy initiative that could inspire other European countries with similar agri-food credentials.