An EU Regulation on Trade arrangements for processed agricultural products establishes the trade regime for non-agricultural food and drink items made from agricultural products.
They are non-agricultural food and drink items made out of agricultural products. The regulation contains a list of PAP goods. The main product groups include:
- processed dairy products;
- frozen fruit and vegetables;
- non-alcoholic beverages and all alcoholic beverages except wine.
The regulation covers trade arrangements governing import duties on the one hand, and rules governing the payment of export refunds on the other.
- Import duties on PAPs include an industrial element (ad-valorem duty*) and an agricultural element (reflecting the tariff applicable to the agricultural ingredients).
- Products such as spirits, processed fruit and vegetables, pectic substances (a group of polysaccharides made up primarily of sugar acids) and tobacco products, bear an ad-valorem duty or a specific duty (per quantity).
- Several particular regimes apply to other products.
- EU exporter may be granted export refunds when exporting basic agricultural products (sugar, eggs, cereals, rice and dairy products) in the form of PAPs to non-EU countries.
- Refunds aim to prevent such exporters from being penalised for the price they must pay for their supplies within the EU because of common agricultural policy subsidies.
- They should only cover the difference between the price of an agricultural product on the EU market and on the world market.
- Since 2014, export refunds may only be granted in cases of major market disturbance, caused by a significant fluctuation in price or the threat thereof.
- The EU uses a refund certificate system in order to comply with international rules which limit the amount of export refunds paid for PAPs.
- The certificate system allows exporters to know in advance whether they are able to claim a refund.
- Small exporters, with a refund request of less than €200 000 within a budget year, do not need a certificate.