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EU's sugar
subsidies in a jam
By Gustavo
Capdevila
GENEVA - Thailand, Australia and
Brazil, which produce sugar at US$280 a tonne, are
embroiled in a complicated trade battle with the
European Union, which is subsidizing its sugar producers
at a cost of $660 a tonne, and with 15 sugar-producing
nations in the developing South as well that have access
to the European markets.
The Eurozone's
agriculture producers are a formidable stumbling block
to rationalization of farm subsidies throughout the
globe as the industrialized world uses trade
restrictions to keep much cheaper agriculture-producing
countries out of their markets.
Australia and
Thailand are the world's third- and fourth-largest sugar
producers respectively. Brazil is first. The three
countries have filed a complaint with the World Trade
Organization (WTO) to determine whether sugar
production and export subsidies of the EU - the world's
second-biggest producer - are legal under existing trade
treaties, an action that seems to have offended EU
officials.
"We are very disappointed ... and
regret that [the three countries] have taken this
initiative," said Carlo Trojan, EU representative to the
WTO.
But, said David Spencer, the chief
negotiator for Australia, "So how can the EU produce 40
percent of the world production share in sugar? How is
it possible?"
This phenomenon, said Brazil's
representative to the WTO, Luiz Felipe de Seixas Correa,
"is the result of the distortion that we have to
address. And the distortion lies with the European
internal support program for sugar."
The EU
subsidizes large farm operations whose high production
costs put them at a disadvantage on the world market,
including sugar-beet growers in Britain, and the bloc
supports companies that refine imported raw sugar, often
coming from former European colonies.
But at the
meeting of the Dispute Settlement Body (DSB) in Geneva
on Monday, the EU was able to block the creation of a
panel of three independent experts who would judge
whether the bloc upholds the international trade rules
regarding sugar.
At the DSB's next sessions,
which have not yet been scheduled, a panel will
automatically be set up to handle the sugar question,
which is complicated because it could affect the
interests of a group of 15 sugar-producing nations in
the developing South.
The complaint lodged by
Australia, Brazil and Thailand is "quite disappointing",
commented Jaynarain Meetoo, ambassador of Mauritius,
speaking on behalf of his and the other 14 countries
potentially affected by a WTO decision against the EU.
In addition to Mauritius, the group is made up
of Barbados, Belize, Democratic Republic of Congo, Fiji,
Guyana, Ivory Coast, Jamaica, Kenya, Madagascar, Malawi,
St Kitts and Nevis, Swaziland, Zambia and Zimbabwe.
These countries, members of the Africa, Caribbean and
Pacific (ACP) bloc of former European colonies, enjoy
the benefit of special access to EU markets.
Meetoo maintains that Australia and Brazil had
repeatedly assured that in their dispute with the EU
they would not take any steps that could harm the
interests of the ACP countries, which supply sugar to
the European markets.
Big agro-industries in the
EU import raw sugar from the ACP and from poor countries
to refine it and export it, even back to developing
countries, with added value paid for with subsidies, and
at prices far below production costs, say market
analysts.
Raw-sugar imports involve high
tariffs, except in the case of the ACP and of the
so-called less developed countries (LDCs), for which the
EU has a system of quotas. As a result of this system,
the European bloc pushes down sugar prices on the
international market.
But Meetoo argues that the
decision of Australia, Brazil and Thailand - three major
producers and exporters of numerous farm commodities -
to file the complaint shows that the WTO rules are being
used to deepen the marginalization of small, vulnerable
economies.
The EU presented itself before the
WTO as defender of the ACP countries. "We consider this
is a direct attack on those who benefit from preferences
on the EU market," Trojan said.
Oxfam, a
Britain-based international humanitarian organization,
has been following the evolution of the world sugar
market, and had some strong words for the EU policy.
In 2001 the EU launched its initiative to open
its markets for the LDCs - the 49 countries with the
lowest per capita gross domestic product (GDP) - known
as "Everything But Arms" (EBA), because it only excluded
weapons from entry into the bloc.
Among the
various commodities covered by the plan was sugar from
the LDCs.
"But in order to make room for this
EBA sugar, instead of cutting back on European quota
production, the EU has cut back quota imports from the
ACP countries - literally trading one group of
developing countries off against another," said Celine
Charveriat, Oxfam's representative in Geneva.
"The EU is now the world's largest exporter of
white sugar. In 2000-01 it exported almost 7 million
tonnes of sugar, at prices far below its costs of
production," Charveriat said.
Oxfam proposes
that the EU cut its own production by 25 percent, end
its dumping practices, restore the ACP preferential
quotas and greatly increase access for sugar imports
from LDCs.
Brazil rejects the idea that the
request for a dispute settlement panel at the WTO was
aimed against the ACP group. De Seixas Correa stressed
that this a matter involving only the EU, which "can
address ACP concerns after it loses this dispute".
Fellow complainant Australia also asserts that
the legal action targets the EU only, and specifically
the subsidies it grants sugar exports. Nor does
Australia propose to question the preferential
agreements the EU has established with its former
colonies of the ACP that are sugar exporters, said
Spencer.
(Inter Press Service)
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