End nears in ongoing Poland, Hungary corn-cheese dispute
The breakthrough came during Polish Foreign Minister Bronisław Geremek's visit to Budapest, when Hungary agreed to lift import duties on Polish cheese and milk products. In exchange, Poland agreed to allow 20,000 tons of Hungarian corn to be imported duty free this month.
"The deal really is corn for cheese," said Paweł Dobrowolski, spokesman for the Polish Foreign Affairs Ministry. "Both sides decided to soften their stand, the Hungarians on cheese imports and Poland on corn."
Last year, under pressure from farmers here, Poland slapped restrictions on corn from Hungary after imports skyrocketed in 1997. Hungary responded by tagging Polish cheese and cottage cheese with tariff burdens. Last week calmed the waters around the corn war and set the stage for ironing out issues in other trade areas, officials said.
"Technical details will be smoothed by ambassadors and ministries of agriculture," Dobrowolski said. "It has to be worked out in detail."
In 1997, Hungary exported 211,300 tons of corn to Poland, a thirty-fold increase over levels the previous year. Hungarian corn accounted for slightly less than half of the 445,000 tons of corn imported in 1997. Poland raised the tariff to 20% in 1998 from a former duty-free status. Although the tariff took effect Jan. 1, 1998, corn was actually imported duty free through May to complete pre-existing contracts.
Hungarian corn shipments to Poland remained high in 1998, said Jerzy Plewa, Polish deputy agriculture minister. Total corn imports in 1998 stood at 429,000 tons, of which 143,300 tons came from Hungary.
The high level of Hungarian imports particularly aggravated Polish farmers because of assistance that Hungarian farmers were receiving from their government. "I want to point out that imported corn was subsidized," Plewa said.
Polish corn growers do not receive government subsidies, and farmers were hardest hit in southwestern Poland where corn is grown extensively, Plewa said. "The destabilization of the market was visible," he said. When imposing tariffs on Hungarian corn, Poland invoked CEFTA's Article 14, which permits countries to use "protective measures" when excessive import levels create economic difficulties.
The trade dispute came to a head last spring when Poland granted Hungary a preferential quota of 70,000 tons for the year. Deeming it too small, Hungarian officials slapped high import tariffs on Polish cheese and cottage cheese mid-year. "These were retaliation measures that did not have (CEFTA) treaty justification," Plewa said.
Following Geremek's meeting in Budapest last week, the two sides have taken significant steps to closing the corn war chapter. The deal is expected to be completed this month, officials said, before the Polish corn harvest peaks in October and November.
"We talked products, not timing and implementation," Dobrowolski said about the Budapest meeting. The final deal will probably be worked out this month, he said.
The deal would involve raising the annual import quotas on Hungarian corn to 78,000 tons, which would open the gate for 20,000 tons of corn to enter Poland duty free this month. Hungary would also lift duties on cheese and other milk products. Under the current quota system, only 2,000 tons of corn can enter Poland each month duty free this fall.
The corn-cheese wars are indicative of deeper problems haunting CEFTA relations and officials said a bilateral solution could set the framework for tackling other outstanding trade issues.
"We decided to start somewhere and end the food conflict," Dobrowolski said. "We hinted that in the future we shall have to work out mechanisms for (dealing) with subsidizing of food in this part of Europe."
Resolving issues related to a broad spectrum of products will probably be worked out within the realm of CEFTA, Dobrowolski said. "We have to try to work out a just system for everyone," he said. "The list (of products) is long, potatoes, wheat, which is also a major issue and which is not easy to tackle at the moment. The decision was to start with something relatively easy. The list goes on and on."
"The deal really is corn for cheese," said Paweł Dobrowolski, spokesman for the Polish Foreign Affairs Ministry. "Both sides decided to soften their stand, the Hungarians on cheese imports and Poland on corn."
Last year, under pressure from farmers here, Poland slapped restrictions on corn from Hungary after imports skyrocketed in 1997. Hungary responded by tagging Polish cheese and cottage cheese with tariff burdens. Last week calmed the waters around the corn war and set the stage for ironing out issues in other trade areas, officials said.
"Technical details will be smoothed by ambassadors and ministries of agriculture," Dobrowolski said. "It has to be worked out in detail."
In 1997, Hungary exported 211,300 tons of corn to Poland, a thirty-fold increase over levels the previous year. Hungarian corn accounted for slightly less than half of the 445,000 tons of corn imported in 1997. Poland raised the tariff to 20% in 1998 from a former duty-free status. Although the tariff took effect Jan. 1, 1998, corn was actually imported duty free through May to complete pre-existing contracts.
Hungarian corn shipments to Poland remained high in 1998, said Jerzy Plewa, Polish deputy agriculture minister. Total corn imports in 1998 stood at 429,000 tons, of which 143,300 tons came from Hungary.
The high level of Hungarian imports particularly aggravated Polish farmers because of assistance that Hungarian farmers were receiving from their government. "I want to point out that imported corn was subsidized," Plewa said.
Polish corn growers do not receive government subsidies, and farmers were hardest hit in southwestern Poland where corn is grown extensively, Plewa said. "The destabilization of the market was visible," he said. When imposing tariffs on Hungarian corn, Poland invoked CEFTA's Article 14, which permits countries to use "protective measures" when excessive import levels create economic difficulties.
The trade dispute came to a head last spring when Poland granted Hungary a preferential quota of 70,000 tons for the year. Deeming it too small, Hungarian officials slapped high import tariffs on Polish cheese and cottage cheese mid-year. "These were retaliation measures that did not have (CEFTA) treaty justification," Plewa said.
Following Geremek's meeting in Budapest last week, the two sides have taken significant steps to closing the corn war chapter. The deal is expected to be completed this month, officials said, before the Polish corn harvest peaks in October and November.
"We talked products, not timing and implementation," Dobrowolski said about the Budapest meeting. The final deal will probably be worked out this month, he said.
The deal would involve raising the annual import quotas on Hungarian corn to 78,000 tons, which would open the gate for 20,000 tons of corn to enter Poland duty free this month. Hungary would also lift duties on cheese and other milk products. Under the current quota system, only 2,000 tons of corn can enter Poland each month duty free this fall.
The corn-cheese wars are indicative of deeper problems haunting CEFTA relations and officials said a bilateral solution could set the framework for tackling other outstanding trade issues.
"We decided to start somewhere and end the food conflict," Dobrowolski said. "We hinted that in the future we shall have to work out mechanisms for (dealing) with subsidizing of food in this part of Europe."
Resolving issues related to a broad spectrum of products will probably be worked out within the realm of CEFTA, Dobrowolski said. "We have to try to work out a just system for everyone," he said. "The list (of products) is long, potatoes, wheat, which is also a major issue and which is not easy to tackle at the moment. The decision was to start with something relatively easy. The list goes on and on."
