Bridges Weekly Trade News Digest • Volume 14 • Number 4 • 3rd February 2010
Brazil, Australia, and Thailand Condemn Extra EU Sugar Exports
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Three of the world’s leading sugar producers — Brazil, Australia, and Thailand — have joined together to criticise EU plans to export an additional 500,000 tonnes of sugar, which they believe are above quota limits set by current WTO agriculture agreements. The EU’s plans, which coincide with a bumper crop of beet sugar in Europe this year, come as lower than expected cane harvests in Brazil and India have caused global sugar prices to soar in recent weeks.
In a press conference on 1 February, the three nations called on Brussels to abandon its plans, which they see as a breach of WTO agreements establishing an export ceiling for subsidised sugar from the EU. The countries, which were successful in a WTO sugar subsidy dispute with the EU in 2005, also stated that they could potentially reopen the case, which could result in retaliation.
The sugarcane industry association of Brazil, Unica, has also voiced strong opposition to the moves by the EU, accusing it of “trying to externalise its surplus problems on world markets.” According to Unica, the EU plans are “short-sighted,” incentivising beet farmers to plant more crops even though future prices are uncertain. The industry association also called for the approval of the plans by WTO sugar panel members from the three nations before the EU votes on the measure in the coming days.
Currently, the EU is committed to exporting no more than 1.37 million tonnes of subsidised sugar annually. However, the bloc of 27 nations maintains that the export limit does not apply in this case, arguing that the out-of-quota sugar is not subsidised. Were global prices to dip below the production costs again however, the EU believes the current criticism would be more founded.
EU sources told Bridges that production costs of its sugar were below prices on the global market, leading the bloc’s lawyers to conclude that the additional exports did not meet any of the criteria established in the 2005 WTO case (WT/DS265) to qualify as subsidised. The out-of-quota exports, to be shipped over the next six months, were seen by the EU as temporary measures, in response to the “quite exceptional situation” on the global market (prices last week reached a 29-year high in New York).
Furthermore, the Commission argued, “with production below consumption and diminishing sugar stocks, sugar prices have risen to unprecedented levels, to the detriment of consumers in poorer countries.” The EU plans were lauded by beet farmers, who called it the “right proposal at the right time.”
Brazil, Australia, and Thailand disagree with the EU analysis and continue to posit that the EU moves are illegal. Brazil’s ambassador to the WTO, Roberto Azevedo, said that the nature of the EU sugar regime meant that all of its sugar production is subsidised.
The three nations, which are working together closely, will monitor the final EU decision, which they believe could lead to new trade disputes.
ICTSD Reporting; “EU sugar trade boost condemned as ’short-sighted’,” AGRIMONEY.COM, 27 January 2010; “Brazil, others condemn extra EU sugar export,” REUTERS, 1 February 2010; “EU boosts sugar exports as prices soar,” BBC NEWS, 28 January 2010; “EU investigating ways to breach sugar export curbs,” AGRIMONEY.COM, 20 January 2010; “Australia, Brazil, Thailand decry EU sugar plan,” BUSSINESS WEEK, 1 February 2010.
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To see ICTSD’s recent study on how the draft Doha deal could affect trade in sugar, please see the paper by Amani Elobeid at: http://ictsd.org/i/publications/57666/