EU attacked for raising sugar exports

By Chris Mercer

- Last updated on GMT

Related tags: European union, Wto

Sugar reform may yet hijack December's WTO talks as Australia,
Brazil and Thailand again accuse the EU of shirking its obligations
by planning to increase sugar exports by two million tonnes.

Australia said the EU's plan was inconsistent with the World Trade Organisation (WTO) ruling that the EU's annual sugar exports should be reduced as part of its sugar sector reforms.

Officials from Thailand and Brazil joined Australia in complaining to the WTO disputes panel. The WTO said in May that the EU must cut subsidised sugar exports to around 1.2m tonnes.

"The disposal of additional quantities of EU sugar on the world market would come at a time when world sugar prices are only just beginning to recover from record low prices,"​ said Peter McGauran, Australia's agriculture minister.

Raw sugar prices have almost doubled since the start of last year, mainly due to its use in rising ethanol consumption as industries look for alternatives to highly-priced oil-based materials.

The European Commission confirmed that its sugar exports would rise from around five million tonnes to seven million tonnes this year due to excess production in the bloc.

"Of course we are attacked for that, but the WTO decision was in May and they have to give us an acceptable amount of time to put it in place,"​ said a Commission spokesperson.

"We are still in the old system and so we are still authorised to do that [increase exports],"​ he said, adding that the extra exports would not be subsidised with refunds.

The WTO is expected to announce a deadline for the EU to cut exports to the required levels on 28 October.

The body ruled for the second time in May that the EU's sugar regime was illegal, mainly for unfairly subsidising exports to the world market and maintaining an internal price three times that of world prices.

Now, the new rift between the EU and three of the world's biggest sugar producers threatens to put a cloud over up-coming WTO talks in Hong Kong - now only two months away.

And sugar reform plans themselves are still being hotly debated by member states, despite the Commission's desire for an agreement before the WTO meeting.

Current reform proposals include a 39 per cent cut to EU sugar prices over two years; something generally expected to hit sugar and sweetener suppliers but bring cost-savings for food and drink producers.

But the controversial plans have spawned an opposition camp, including Poland, Italy Spain, Portugal, Finland, Ireland and Greece, that would be enough to block reform plans in the Council of Ministers and prevent the Commission from making progress before the next WTO meeting.

Related topics: Commodities, Cocoa & Sugar

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