Estonia braces for EC fine on surplus food

  • 2003-11-13
  • Baltic Business News
TALLINN - Estonian officials said last week that they were resigned to paying fines imposed by the European Commission on excess food stocks, but that it was unclear as to how large the fines would actually be.

The Aripaev daily reported on Nov. 7 that Europe was threatening the Baltic country with fines for its failure to liquidate its excess food stocks before accession on May 1.
According to preliminary estimates, the European Commission could hit Estonia with up to 1 billion kroons (64.5 million euros) in penalties, though officials were quick to dismiss the possibility of such an exorbitant fine.
Henrik Hololei, government adviser in EU matters and until recently the head of the office for European integration, said that the commission was unlikely to impose full fines on Estonia for excess food stocks.
"This is another journalistic exaggeration. I have seen no figures. Possible that the commission would make concessions, but I am afraid it would not apply on sugar and milk powder," he said.
In addition, Estonia would be obliged to tax stocks found in warehouses that exceeded the permitted level with customs duties that are applied on third countries.
Andres Oopkaup, vice chancellor of the Ministry of Agriculture, said that a fine of up to half a billion kroons was certain, though he admitted that the final fine could amount to as much as 1 billion kroons.
Tauno Lukos, Estonian agriculture attache in Brussels, stressed that the exact amount of the fine could not be determined at this stage since it ultimately depended on extraordinary circumstances that should restrict import of cheap agricultural products before next May.
Officials said the fine could be withheld from the amount of EU aid the government has included in next year's budget revenues.
Estonian importers, fearing a sharp rise in purchase prices for commodities after accession next spring, have been taking advantage of the country's bilateral trade agreements with non-EU members, such as Ukraine, and importing large amounts of goods.
Ministry of Agriculture Tiit Tammsaar said that a political decision was needed from the government to solve the crisis and that the two most critical food items in question were sugar and milk powder.
The government has already started to prepare measures to restrict imports of these items. Also, it is considering whether to terminate the free trade agreement with Ukraine earlier than May 1, 2004, as currently planned.
The third option is to pass a law that would impose large fines on owners of the warehouses where the surplus staples are being stored should inspectors find it impossible to determine the real owners of the goods.
Marje Josing, head of the Estonian Institute of Market Economics, said that government was quite late in taking action, since the stocks on which the fine will be made are already in the country.
Josing said that while food importers were acting according to the law, the state was now attempting to rush through laws that would make their life considerably tougher.
Oopkaup of the Agriculture Ministry said that he would not discuss possible countermeasures since businessmen who specialize in food imports would then know what the government planned to do.