Fischler muses on sugar reform

Related tags Sugar regime European union

With the Commission proposal for changes to the EU sugar regime but
a few months away, Commissioner Franz Fischler explains why sugar
reform is 'unavoidable.'

Speaking at a conference in Brussels this week the agriculture commissioner cited internal criticism and trade distortion as key factors in the moves to a more liberal regime.

"Internal criticism of the support system for lack of competition, high domestic prices, quota rigidities and no market orientation,"​ said Fischler as factors.

The sugar regime is in complete disharmony with overall CAP orientation to move from product to producer support, and from high to low price support, he added.

These are compounded by external criticism for high trade-distortion (high border protection, high level of export subsidies) and Everything But Arms Initiative (EBA) that opens up the potential for more EU imports.

According to the Commissioner the overall objective of the sugar reform is to establish 'consistency of the sugar regime with the overall path of the new CAP.'

The three, now well-known, options for change to the regime currently under discussion in Brussels are :leaving the regime as it is; providing a price reduction; or alternatively full liberalisation for sugar.

With the failure of WTO talks in Cancun last year, pressure has intensified on Europe's heavily subsidied sugar regime - trading at three times the world price- to change.

While critics want to see a fairer regime with Europe flinging open the doors to imports from developing countries, European sugar producers are concerned that full liberalisation would raze the industry to the ground, and leave Europe open to fraud.

"Franz Fischler himself said that a system close to liberalisation would result in a 75 per cent loss of sugar production in the EU,"​ Jean-Louis Barjol, at the Committee of European Sugar Producers told​ in February this year.

An option that embraces full liberalisation which in effect would mean abolishing the current domestic EU price support system, abandoning production quotas and totally removing import tariffs and quantitative restrictions on imports. A single payment system - the same as that tabled for CAP reform - has been proposed to cushion the effect on sugar producers.

The impact of losing 75 per cent of production would send ripples throughout Europe, with massive job losses across the EU-15.

The European beet growers' association (CIBE) estimates that 500,000 jobs in the EU depend on the current common market organisation (CMO) sugar regime, in place since 1968.

The next major step in the process towards sugar reform in Europe will be in March when agriculture ministers gather in Brussels to discuss the Commission's 'three-option' proposals, each bringing to the table national positions garnered through extensive stakeholder discussions. The Commission is expected to draw up a final proposal in June 2004.

Related topics Commodities Cocoa & Sugar Ingredients

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