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CHOCOLATE CASE STUDY
TED Case Studies
CASE NUMBER: 521 CASE MNEMONIC: CHOCOLAT
EU's CHOCOLATE DISPUTE
IDENTIFICATION LEGAL CLUSTERS GEOGRAPHIC CLUSTERS TRADE CLUSTERS ENVIRONMENT CLUSTERS OTHER FACTORS
1. The Issue
A passionate debate over the meaning of chocolate has emerged ever since the creation of the European Market and the free movement of goods among EU nations in 1992. Despite their concern for standardization of goods throughout the 15 EU nations, EU policy makers have yet applied that rule to chocolate. Their effort to solve this issue has been significant, but the problem is complex: 7 of the 15 EU nations permit the use of substitutes in the making of chocolate. The other 8 claim that only chocolate made
at the end of the 19th Century. In 1983. an exception was made for a few European countries (Denmark. European chocolate manufacturers mainly import cocoa beans from West African countries such as the Ivory Coast. the leading chocolate producers are Belgium. In Europe. Directive 73/241/EEC In the EU cocoa and chocolate products are regulated by Directive 73/241/EEC. the European Commission has reviewed this directive more then once and finally presented a proposal for its reform in April 1996. the same countries were granted another exemption by allowing these countries to call their chocolate products "milk chocolate" despite the use of 20% of milk in their products compared to 14% in other European countries. Also. The directive was introduced in 1973 and concerns the composition.htm 2/10 . cocoa trees are now cultivated in Africa and Asia. France. chocolate became more popular and accessible to the broader population.2/27/2014 CHOCOLATE CASE STUDY out of cocoa butter should be called pure chocolate. the proposed directive implies severe economic. The legal framework that relates to Cocoa and Chocolate products is based on a directive that was first introduced by the EEC in 1973. Germany and the United Kingdom. Since then. For many years each country has had its own set of rules concerning the making of chocolate. the directive had no significant impact on national laws. the European Commission recognized the need to harmonize the free movement of chocolate products among European members.american. Ghana Nigeria and Cameroon. Under this Directive the use of vegetable oils in chocolate making other than cocoa butter was prohibited. Cocoa trade has considerably increased over the years and many developing countries economies rely partly on the export of cocoa beans. The division between the EU nations is mainly caused by the desire to protect their respective industry interests. Ireland and the UK) which were using vegetable fats in their chocolate products. They were in favor of allowing member countries to decide of the use of http://www1. They then proceed to the transformation of cocoa beans into chocolate. However. 2. At first. manufacturing packaging and labeling of products to ensure the free movement of goods in the EEC. the building of the European Union required a certain harmonization over chocolate production and chocolate products. The main aspect of the proposal is that it allows member countries to replace cocoa butter by vegetable fats in chocolate products. Later on. this most delightful product was seen as a luxury and was only enjoyed by the upper class. However. However. Its consumption spread quickly throughout Europe. In fact. social and environmental consequences for developing countries. Yet. Description Brief chocolate history Chocolate has been enjoyed around the entire world for centuries. Cocoa beans were first brought to Europe by Christopher Columbus in the 16th Century but chocolate only became popular in the 17th Century. In addition to Central America. where the Aztec and Maya civilizations produced a chocolate beverage by roasting cocoa beans. it is perhaps the most popular and widespread treat of modern day. These beans were found in pods that grew on cocoa trees in the tropical forests of Central America. Its first form appeared in Central America thousands of years ago.edu/ted/chocolat.
american. Cocoa exporting countries. benefit from such rule since it enables them to sell their chocolate in all EU countries. Indeed. The proposal was rejected by the European Parliament and was declared unfair to cocoa producers. chocolate producers. For countries such as Belgium. This is purely an intellectual property issue and bares similarities with other products such as butter and margarine. it directly affects all EU chocolate producers. for their part. which constitute the primary substitute used by chocolate producers to replace cocoa butter. Greece and Italy. Ghana. They argue that chocolate containing vegetable fat should not be called chocolate.2 million cocoa producers and 11 million people depending on cocoa for a living. France. Finland and Sweden which allow the use of vegetable substitutes. there are 1. this proposal is quite unfavorable.edu/ted/chocolat. It affects the commercial interests of these countries by allowing cheaper chocolate products (those made with substitutes) to circulate freely within the EU. Such product is different in taste and nutrition components. Austria. They particularly rely on the export of cocoa beans to foster their economic and social development. the Ivory Coast and Nigeria. and other groups of interest defending developing countries. Luxembourg. Another consequence of the directive would be severe job loss in this sector.2/27/2014 CHOCOLATE CASE STUDY substitutes in chocolate production. which can mislead consumers if the product is called chocolate. Portugal. Its effect on the environment is also a big concern.However. Ireland.htm 3/10 . It also seems to raise environmental issues: the increase of shea nut and palm oil tree production. Impact of the revision of directive 73/241/EEC As I mentioned above. http://www1. The directive threatens to reduce the demand for cocoa beans and therefore limit the exports of commodity dependent countries. countries such as Great-Britain. They might face a sharp drop in their sales. for these "chocolate purists". the export of commodities represents a great source of revenue. the proposed directive has a huge impact on the different groups involved in this case. the directive is bad news. all chocolate products were allowed to circulate freely within the member countries. which do not use cocoa butter substitutes in chocolate production and do not allow the import of such products in their countries. In 1996. First. Spain. For those countries. cocoa exporting countries. Most of EU's cocoa beans (about 90%) are imported from West African countries like Cameroon. On the other hand. It is also estimated that in Africa. In addition. Italy. Denmark. Germany. particularly chocolate producers. cocoa producers and consumers. may have a negative impact on the environment. are also affected by the European parliament's ruling. these countries want to preserve chocolate and protect its name. The revision of the directive provoked various reactions among EU countries. in 1992 the birth of a single European market made it essential to review the directive since from that moment. These issues are discussed below. directive 73/241/EEC was revised once again allowing the addition of up to 5% of vegetable oils other than cocoa butter in the production of chocolate providing the addition is clearly mentioned on their labelling. or consumer rights.
Because of the impact of harmonization policies on developing countries and the possible expansion of the EU to include in Eastern and Central European countries. of these international agreements signed by the EU and its member states which clearly elaborate its responsibilities towards producers and consumers alike. is known for its intensive production practices. in particular. Yet. Shea nut production depends on intensive use of water and wood. Therefore. Intensive production of these oils would also increase the use of pesticides and fertilizers on plantations. with the International Cocoa Agreement (ICCA). Both cocoa and alternative oils are produced intensively in Asian countries such as Malaysia and Indonesia in order to compete with leading exporters. which involve massive use of fertilizers. Finally. the WTO has no jurisdiction since it falls under a European directive that regulates trade within the EU. 3.edu/ted/chocolat. In all three agreements not only do EU member countries have the responsibility to avoid policies that would affect developing countries negatively. Under the Maastricht treaty. and perhaps even the letter. the Lome Convention and the International Cocoa Agreement (ICCA). The EU and the WTO In this specific case. EU members make the commitment of encouraging the expansion of cocoa consumption in their own countries. EU's Legal obligations Theoretically.american. we can associate some aspects of this case to the WTO's General Agreement on Tariffs and Trade (GATT) and the Agreement on Trade-Related aspects of Intellectual Property (TRIPS). Cocoa substitutes include shea nut oil and palm oil. An increase in the production of these oils would be damaging to the environment. the WTO is being increasingly concerned about EU-ACP relations. By signing the Lome convention. which are scarce resources in Africa. Perhaps the next trade round could serve as a basis for discussion. But the effect is damaging for the ecosystem. Asia.htm African Timber ban 4/10 .2/27/2014 CHOCOLATE CASE STUDY The effect of the directive on the environment should also be of concern. the EU undertakes obligations to the African Caribbean and Pacific States (ACP countries) concerning commodities. EU members promised to promote " sustainable economic and social development of developing countries. Related Cases West African Cocoa http://www1. but they also have to "provide adequate information to consumers"(art. 3 of the Maastricht treaty). according to the European Fair Trade Movement (EFTM) and I quote: "The proposed EU harmonization at 5% is certainly in breach of spirit. cocoa producers should have their interests protected under the Maastricht treaty. The issues raised by this case could certainly serve as a basis for the WTO to reflect on its future role in EU-ACP trade relations.
6. packaging and labelling of products in order to ensure the free movement of goods within the EC. Spain. manufacturing specifications. 1999 II. who feared their products would be undercut by cheaper chocolate. Discourse and Status:Disagree and In Progress There has been a disagreement among EU members over the revision of Directive 73/241/EEC.htm 5/10 . They also argued that chocolate products containing substitutes should not be called chocolate.2/27/2014 CHOCOLATE CASE STUDY Cassis Trade Dispute The EU-US banana Dispute EU-US Basmati Rice Dispute Trade Canola and Genetics Trade German Beer Purity Law Liquor Dispute between Chile and Peru Ethiopia Coffee Exports 4. Greece. this proposal proved to be unsatisfactory to the other 8 members. France. Sweden and the UK. Draft Author:Veronique Kouame May 11. Geographic Clusters 9. 7. Germany. Austria. Legal Clusters 5. Decision Breadth:15 countries The outcome of this issue directly affects the 15 member States of the European Union which are Belgium. Luxembourg. Denmark. Finland. Legal Standing:Treaty III. Italy. the proposed reform accomodated 7 EU members. which already allowed the use of substitutes in chocolate production. By allowing the addition of up to 5% of vegetable fats other than cocoa butter in chocolate products provided that it is clearly mentioned on the label .american. which refers to cocoa and chocolate products. 8. the Netherland. Geographic Locations a. Forum and Scope:EU and Region Directive 73/241/EEC/ provides a set of rules in terms of the composition. Portugal. Ireland. However.edu/ted/chocolat. Geographic Domain: EUROPE http://www1.
Italy. Nigeria and Cameroon. Germany. Type of Measure:IPROP and REGBAN 13. it also affects cocoa producing countries. Portugal. Austria. Type of Habitat:Temperate IV. Luxembourg. Indirect Impacts: 14. Relation of Trade Measure to Environmental Impact a. 10. Sub-National Factors:No 11. ireland. Sweden and the UK. France.htm 6/10 . Trade Clusters 12. Denmark.2/27/2014 CHOCOLATE CASE STUDY b. the Netherland. particularly the leading producers and EU west african trade partners such as Cote d'Ivoire. Greece. Geographic Impact: the legal measure has a direct impact on EU member countries: Belgium. Direct v. Geographic Site: Western Europe c.edu/ted/chocolat. Yet. Spain. Ghana. Finland. Directly Related to Product: NO http://www1.american.
220 160. Related to Process: YES 15.905 United Kingdom 545. pralines.htm Chocolate products Kg/Head per annum 7/10 .700 216. July 1998 Chocolate consumption in Europe in 1996 Country http://www1.400 113.095 * includes unfilled chocolate. sweetened cocoa powder and other foods containing cocoa. spreads containing cocoa.300 32.american. Indirectly Related to Product: YES COCOA c.825 176.012. Reference: Statistical Review 1996.845 28.2/27/2014 CHOCOLATE CASE STUDY b. filled tablets and bars.740 29.435 52.415 1. Economic Data Chocolate Production in Europe Production 1996 in metric tonnes Countries Austria Belgium Germany Denmark Spain France Finland Greece Italy Ireland Netherlands Portugal Sweden Switzerland Norway All chocolate products* 80.edu/ted/chocolat.105 28.600 3.985 393. sugar confectionery containing cocoa. November 1997 Source: International Cocoa organization. Caobisco. bonbons. Trade Product Identification: CHOCOLATE 16. Not Related to Product: NO d.275 35.540 170. white chocolate.
american.52 10.76 4.59 CAOBISCO data on per capita chocolate consumption Source: International Cocoa organization.60 6. May 1998 17.htm 8/10 .12 8.84 3.29 8.0 310.81 United Kingdom 8.18 8.0 125.57 6.0 Ghana Indonesia Brazil Nigeria Cameroon Malaysia http://www1.21 10. Exporters and Importers: Top ten cocoa producing countries ICCO forecasts of production of cocoa beans for the 1997/98 cocoa year Country Production forecast for 1997/98: (in thousand tonnes) 370. Industry Sector:FOOD 19. Impact of Trade Restriction:HIGH 18.28 3.69 2.93 5.0 160.0 155.2/27/2014 CHOCOLATE CASE STUDY Austria Belgium Germany Denmark Spain Finland France Greece Italy Ireland Netherlands Portugal Sweden Switzerland Norway Total 9.0 Reference: Côte d'Ivoire 1150.edu/ted/chocolat.94 3.0 100.06 10.54 1.
Culture: No 26. Sept 16 1998. Mark Kurlansky. 27.Feb 1999. Gregg Easterbrook. Environment Clusters 20. References and Links ARTICLES Europe says less Chocolatey is still chocolate.2/27/2014 CHOCOLATE CASE STUDY Quarterly Bulletin of Cocoa Statistics.edu/ted/chocolat. Travel Holiday. PANOS. Substitutes: Like products VI.htm 9/10 . April 1998 V. www. 24 (1). and Diversity of Species: N/A 22. Nov. Urgency and Lifetime:Low and 3-5 years 24. Trans-Boundary Issues:Yes Cocoa traders worry that the US. Associated Press Writer. Nando Times. 1997. WEBSITES http://www1. Oct 20 1997. Wall street journal Chocoholics Disunited .net EU Wages Bureaucratic War over Meaning of Chocolate. 1997/98 Source: International Cocoa organization. US News and World report.org DISCUSSION PAPERS A clone is being proposed: it would be false chocolate. Melvis Dzisah. The WTO and the Trade Cooperation between the ACP and the EU: Assessing the options. Environmental Problem Type:Rights 21. Rights: Yes 28. European Fair Trade Movement (EFTM) January 1997. Other Factors 25. Maastricht: ECDPM. the world's biggest chocolate consumer might follow EU's steps and lift the ban on vegetable fats. Relevant Literature. Dec 4 1997. Mark Lawrence. Type. Resource Impact and Effect: Low and Regulatory 23.H.oneworld. Name.american. The bitter Taste of European Chocolates.nando. www. Thomas R. 13 1995. (ECDPM Working paper # 16). Asides: A truffling Issue. Let them eat chocolate.
2/27/2014 CHOCOLATE CASE STUDY Europa europa.org Cadbury Limited www.wto.edu/ted/chocolat.org International Cocoa Organization (ICCO) www.eu.org send your comments to Thank you! http://www1.org/euforic The European Union in the U.uk World Trade Organization (WTO) www.org General Secretariat of the African Caribbean and Pacific (ACP) Group of States www.co.icco.S eurunion.htm 10/10 .cadbury.acpsec.american.oneworld.int Euforic www.
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