he EU sugar regime is challenged
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CTA. 2002. he EU sugar regime is challenged. Agritrade, November 2002. CTA, Wageningen, The Netherlands.
Permanent link to this item: http://hdl.handle.net/10568/52610
Brazil and Australia initiated consultations ...
Brazil and Australia initiated consultations with the EU on its sugar regime at the September 27th 2002 meeting of the WTO Dispute Settlement Body. This is the first stage in a challenge to the WTO compatibility of certain aspects of the EU sugar regime. The two countries claim that EU subsidies are trade distorting and fall foul of WTO rules. Brazil has targeted exports of 'C' sugar - that is the sugar produced in the EU outside the 'A' and 'B' quotas; 'C' sugar is not officially part of the EU sugar regime and must be sold internationally without benefit of export refunds. The Australian challenge focuses on the following EU measures: export subsidies on sugar and products incorporating sugar in excess of its WTO export subsidy obligations; discriminatory subsidies to EU refiners, in respect of its WTO National Treatment Obligations. It is not expected that the current consultations will result in a mutually agreeable settlement, so the dispute will go to the dispute panel stage within 60 days. Four ACP countries (Fiji, Guyana, Mauritius and Swaziland) asked to join in the WTO consultations in early October 4. The Commission is anticipating support from these countries and other ACP states. Trade Commissioner Lamy claimed that the action by Brazil and Australia was disastrous news for many small countries that are poorer than Australia and Brazil. Comment: The current challenge to the EU Sugar regime needs to be seen both in the general context of the trajectory of CAP reform and in the context of the European Commission's efforts since 1992 to promote a reform of the EU sugar regime. According to the EU Court of Auditors, the EU sugar regime is now out of step with the main trajectory of CAP reform The timing of the Brazilian and Australian action and the time frame for the WTO procedures to be followed are likely to result in a conclusion some time in 2004, on the eve of the European Commission putting forward draft proposals for reform of the EU sugar regime in 2006. While the Trade Directorate of the Commission is currently mobilising strongly to resist the Brazilian and Australian action, DG Agriculture may well be 'sharpening their pens' with a view to once more proposing the introduction of a shift from price support to direct aid in the sugar sector, in response to the WTO action. The reality is that the Brazilian and Australian action may well strengthen the hand of those in the EU who wish to see the sugar sector brought into the main stream of CAP reform (this includes Commission Fischler who has spoken of taking sugar into a multi-product de-coupled system of farm support). If this were to occur then the value of sugar preferences enjoyed by the ACP would decline anyway, regardless of the challenge (a 25% price reduction would result in income losses of € 250 million for ACP sugar exporters). The European Commission however could argue this was the result of WTO actions rather than the internally driven process of reform. Against this background the question arises: what assurances are ACP sugar producers getting that their support at the WTO will help secure the value of the current trade preferences they enjoy?