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[19.09.2005] EU Won't Be Flooded By Cheap Exports After Reform of Sugar Market Adopted, Commissioner Says

BRUSSELS, Belgium--The European Union's top agriculture official sought to dispel concerns Tuesday that the bloc will be flooded by cheap sugar from the world's poorest countries when import tariffs are lifted in 2009.
Under the so-called 'Everything But Arms' agreement signed in 2001, some of the world's 50 poorest countries will be allowed to export sugar to the EU free of tariffs and quotas.
"EBA exporters also have their own consumers to supply," said EU Agriculture Commissioner Mariann Fischer Boel. "Unless their internal infrastructure and logistics can guarantee a steady supply from alternative sources, for example from Brazil, one should not assume that they would be prepared to send their entire production to the EU."
Speaking to the European Parliament's agriculture committee, Fischer Boel said that with the cheaper price of sugar on the EU market, "this market will lose its attractiveness for some of the exporters that will be unable to cover their transport costs." According to EU calculations, EBA imports will not exceed 2.2 million tons, leaving room for an EU production of 12.2 million tons.
In June, the European Commission announced plans to overhaul the EU's 40-year-old system for protecting sugar growers, despite criticism from domestic producers and some exporters from Africa and the Caribbean who enjoy preferential access to the EU markets.
The Commission presented reforms after a successful challenge to the subsidy system at the World Trade Organization by Australia, Brazil and Thailand who argued the system was unfair.
The Commission is pushing to have the reforms approved by the 25 governments at a meeting of farm ministers in November despite opposition by Spain and Ireland.
The plan would cut guaranteed prices to European producers by 39 percent.
The cuts will be introduced in stages, taking the guaranteed price from the current level of €631.9 (US$775) per metric ton to €385.5 (US$473) by the 2009-10 season. European farmers will get compensation payments to cover around 60 percent of the cuts and special restructuring funds would be offered to farmers that want to switch to other crops.
The cuts were bitterly criticized by some EU lawmakers Tuesday.
"If we do nothing there will be no sugar production. We need to strike the right balance. We must preserve sugar production for the future," Fischer Boel told the lawmakers.
The WTO ruled in April that the EU's system of subsidies to guarantee high prices for European sugar producers was illegal. It agreed with Brazil, the world's biggest producer, which argued that the EU system depressed world prices and made it impossible for others to compete.
EU sugar prices are more than four times higher than the global market rate and are protected by massive import tariffs. Brussels also pays out export subsidies to get millions of tons of sugar a year off its market, helping to keep EU prices high and support Europe's farmers.
Around 325,000 European farmers grow sugar beet, with France, Germany and Poland the biggest producers.


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