Effect of NTMs on Mediterranean exports of F and V to the EU: the case of the entry price regime

The European Union (EU) is the largest importer of Fruit and Vegetables (F and V) in the world. In order to protect the domestic production against the international competition, EU implements a system called Entry Price System (EPS). This system is a trade policy instrument for products considered as sensitive. A threshold level called “Entry Price threshold” is defined for each product. When the import price, is higher than the Entry Price (EP) threshold only the ad valorem tariffs are applied. When the import price at border is lower than the EP threshold by not exceeding 8 per cent of difference, the usual ad valorem tariff plus a specific tariff which depends on the degree of the difference are applied. Finally, when the product is supplied at border with a price below 92 per cent of the EP threshold, a specific tariff equal to the Maximum Tariff Equivalent (MTE) fixed by EU is applied in addition to the ad valorem tariff. The main objective of this Master thesis is to carry out a comprehensive analysis of the effects of the EPS on the products exported from Southern and Eastern Mediterranean Countries (SMECs) to the EU, and to define the main factors involved in the imports of F and V using a gravity model. The analysis comprised the period 2009 and 2015. The results have revealed five cases of effectiveness of EPS according to the indicators of relevance selected. Findings have suggested that the relevance of the EPS is heterogeneous among products as well as countries of origin for most F and V. Regarding to product specific results, the effectiveness of the EPS is highest for tomatoes, clementine and cucumbers. The influence of the EPS on lemons, mandarins and apricots is lower. Oppositely, the EPS is not effective at all for oranges and table grapes. With respect to country specific results, the EPS was of particular relevance for F and V exports from the European nearest countries such as Morocco and Turkey. In contrast, the EPS is of minor importance for exports from more distant countries with high transport costs such as Egypt and Israel. The gravity model applied has found that the most relevant explanatory factors affecting the import flows are the distance, indicating the products are more imported from the neighbor’s countries, and importer GDP per capita showing that the richer country, the greater production and then the lower need to import.