EC SUGAR REFORM PROPOSAL TAKING SHAPE
According to a recently leaked report the EC is set to announce reforms to its heavily supported sugar industry in the forthcoming weeks. The proposed changes — to be released on 14 July by EC Agricultural Commissioner Franz Fischler — would reportedly include significant cuts to domestic support and production levels across the European sugar industry. According to the plan, the reforms would include cutting EC sugar prices by approximately 40 percent, eliminating the safety-net intervention system, merging two national production quotas, and reducing overall production from 17.4 million tonnes to 14.6 million tonnes over three years. The results of these changes would be a 37 percent decline in sugar beet prices and an overall drop in EC sugar output from 20.5 million to 17.5 million tonnes a year. The proposals would take effect from July 2005, with far-reaching impacts on domestic producers. Uncompetitive sugar-growing areas would likely see production disappear under a reformed sugar regime. The EC would offer aid packages to lessen the impact of these changes. The proposal, which has been in the works for months, is part of the overall EC Common Agricultural Policy (CAP) reform (see BRIDGES Weekly, 10 March 2004).
These changes come at a time when the EC is facing unprecedented pressure to reform its sugar regime. It is currently being challenged by Brazil, Thailand and Australia in a WTO dispute settlement panel and a delayed provisional ruling is expected in September (see related story, this issue). In addition to the legal challenge, the EC faces continuing pressure from aid groups, which argue that the high levels of subsidies are impeding the ability of developing countries to compete. Currently European farmers are paid prices more than three times above the world market. Brazil estimates its sugar industry loses US$900 million annually due to Europe’s sugar export subsidies.
"EU Commission Proposes Sweeping Sugar Reform," REUTERS, 23 June 2004; "EU Sugar Plan to Help Trade Talks, Hit Industry," REUTERS, 24 June 2004.
OECD STEEL SUBSIDIES TALKS SUSPENDED; US INDUSTRY BLAMES EC ENVIRO POLICY
On 29 June, 37 major steel producing countries negotiating a multilateral agreement to discipline steel subsidies formally decided to suspend the talks. Disagreements in three areas in particular had plagued the 18-month talks, hosted by the Organisation for Economic Cooperation and Development (OECD). The EC — strongly opposed by the US — favoured allowing subsidies for environmental purposes and for research and development. The EC supported disciplining the use of trade remedies, which the US opposed. The third contentious area related to how to make arrangements for special and differential treatment for developing countries. Participants agreed, however, to continue negotiations on an informal basis, and the steel group is planning to meet again in 2005 to assess the situation. A US steel industry representative commented that a multilateral, rather than piecemeal bilateral solutions, has to be found in an area as plagued by subsidies and overcapacity as steel. Another representative blamed the EC for the breakdown of the talks, stressing that EC insistence on retaining the possibility to subsidise steel producers to offset costs related to the implementation of the Kyoto Protocol — a treaty rejected by the US — had led to the failure.
Steel was high on the WTO agenda after US President Bush decided to impose tariffs of eight to 30 percent on most steel imports in March 2002 to help defend the country’s struggling steel industry against cheap imports, partly blaming the decision on other countries’ subsidies. Following an unfavourable ruling by a WTO dispute panel and the threat of sanctions by trading partners, the Bush administration finally backed off and repealed the tariffs in December 2003 (see BRIDGES Weekly, 11 December 2003).
To access the communiqué of the steel meeting see http://www.oecd.org/document/5/0,2340,en_2649_201185_32362885_1_1_1_1,00.html
"Steel nations suspend talks on subsidy deal," REUTERS, 29 June 2004; "US steel industry blames EU for delay in deal," REUTERS, 29 June 2004.
EC DENIES CHINA MARKET ECONOMY STATUS
On 28 June, the EC announced it was unable to grant China market economy status (MES) following a request by Beijing last June. The EC listed four conditions China would first have to fulfil: reducing state interference with companies; increasing the level of compliance with accounting law; ensuring the equal treatment in bankruptcy law and respect for property and intellectual property rights; and applying market rules in the banking sector. In reaction, Chinese Foreign Ministry spokeswoman Zhang Qiyue said, "China has made a lot of efforts to fulfil its commitments to the WTO. We have revised and updated nearly 3000 laws and regulations related to the economic policy to match the international standards". She added that it would "benefit not just the economic development of China but also the cooperation between the EC and China".
In trade defence investigations (anti-dumping and countervailing measures), China is currently treated as an economy in transition, assuming prices and costs are influenced by the state. Other countries can use prices of third-country markets as a benchmark to compare with domestic prices to determine whether China is dumping or over-subsidising products. If China gains MES recognition, investigating authorities will be able to use prices and costs reported by individual companies, subsequently boosting China’s ability to fight anti-dumping charges. Beijing has acquired MES recognition from New Zealand, Singapore, Malaysia, Thailand and Kyrgyzstan but is awaiting approval from the US and the EC, its biggest trading partners. The EC currently has 32 anti-dumping measures in force and 22 ongoing anti-dumping investigations (six new cases and 16 reviews) against China. The US has 52 anti-dumping measures in force against China.
"Market economy status in trade defence investigations," EU PRESS RELEASE, 28 June 2004; "China says EU refusal to give market economy status unreasonable," EU POLITIX, 29 June 2004; "FM spokeswoman: EU should recognise China’s market economy status," XINHUANET, 29 June 2004.
GLOBAL COMPACT MEETING ADDS PRINCIPLE ON FIGHTING CORRUPTION
At the Global Leaders Summit held in New York on the 24 June, UN Secretary-General Kofi Annan urged over 400 business and labour leaders attending the summit to promote human rights, protect the environment and fight corruption by signing onto and following the principles of the Global Compact, a voluntary corporate citizenship initiative with the twin objectives of mainstreaming a set of ten principles in business activities and catalysing actions in support of UN goals."Of all such efforts, the Global Compact alone is based on universal principles that have been endorsed by all the world’s governments," Annan said at the meeting. "And more than any other, it engages the developing countries, which are home to half its participating firms… and four-fifths of humanity". Launched in 1999 at the World Economic Forum in Davos, Switzerland, the Global Compact saw the addition of a tenth principle at the 24 June summit. The principle requires participating corporations to take measures to fight corruption. In addition to three roundtable discussions on the past, present and future of the Global Compact, the daylong meeting included a keynote address by Brazilian President Luiz Inacio Lula da Silva. While noting that the Millennium Development Goals "are far from being achieved," da Silva welcomed the opportunity to meet with business leaders to "find solutions instead of pointing fingers of blame". In his speech he called business leaders to "make an important contribution" by helping the struggle against "destructive farm subsidies in industrialised countries," referring to the ongoing WTO negotiations.
On 23 June, just prior to the meeting, a group of nongovernmental organisations, including Greenpeace and the Women’s Environmental and Development Organisation (WEDO) held a "Counter Summit". In their final statement, they said that the Compact, as a voluntary initiative, "cannot adequately address corporations’ negative social and environmental impacts. They said the Compact distracts government and the UN from the necessary steps to establish an effective intergovernmental framework on corporate accountability. They called for the creation of a means of corporate accountability enforcement, starting with a "norms" agreement written by the UN Human Rights Commission in 2003.
To access the Global Compact Leaders Statement see http://www.un.org/News/Press/docs/2004/eco70.doc.htm
To access the Counter Summit Civil Society Statement see http://www.earthrights.org/news/ngogcstatement.shtml
"Major Investment Houses Endorse Global Compact Initiative," UN GLOBAL COMPACT PRESS RELEASE, 25 June 2004; "Global Compact Summit adds a 10th principle: Anti-Corruption," UNION NETWORK, 25 June 2004; "Global Compact backed," AP, 25 June 2004; "Managerial Practices to Align With Global Compact," ACCRA, 25 June 2004; "Annan Says Global Compact Is Starting ‘New Strategic Concept,’" UN WIRE, 25 June 2004; "New Book to Help Companies Incorporate UN Global Compact Principles," ETHICAL CORPORATION, 29 June 2004.
NORTH AMERICAN TRADE-ENVIRONMENT BODY CELEBRATES TENTH ANNIVERSARY
The North American Commission for Environmental Cooperation (CEC) celebrated its tenth anniversary on 23 June, with environment ministers from the three member countries — Canada, Mexico and the US — adopting a declaration outlining future cooperation (the Puebla Declaration). The Puebla Declaration lays out the priorities for continued cooperation on environmental matters among the three countries, identifying as top priority the improvement of environmental information, capacity building (especially for environmental management in Mexico), and furthering the understanding of trade and environment linkages. The Puebla Declaration notes that the CEC will continue to work with the North American Free Trade Agreement (NAFTA) Free Trade Commission to develop a strategic plan on trade and environment, in areas which could include: establishing key elements to enhance markets for renewable energy; addressing issues related to trade pathways for invasive species; trade and enforcement of environmental laws, including enforcement of domestic laws that address transboundary trade in environmentally sensitive goods; and market-based approaches to connect North American eco-regions.
The CEC was established under the environmental side agreement to NAFTA in 1994 to address regional environmental concerns, help prevent potential trade and environment conflicts, and to promote the effective enforcement of environmental law in its member countries.
To see the Puebla Declaration visit http://www.cec.org/files/PDF/COUNCIL/Puebla-Declaration-2004_en.pdf
"CEC Council sets vision to guide the North American environmental agenda, CEC RELEASE," 23 June 2004.