TRADE: Sugar Producers Urge Market Liberalisation

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Dec 23 1999 (IPS) - Private sugar producers from a dozen countries have joined forces to fight the trade barriers and subsidies they say obstruct international sugar markets and negatively affect the world’s poorer regions.

Sugar is a dramatic example of trade distortion, as wealthy nations protect their markets from the more competitive product coming from tropical countries, depriving them of an alternative for promoting development and creating employment, according to trade experts.

Sugar co-operatives, associations and companies from Australia, Brazil, Canada, Colombia, India, Thailand and the six Central American nations make up the Global Alliance for Sugar Trade Reform, whose goal is to have an impact on international negotiations.

The group was created four months ago under the initiative of Queensland Sugar Corporation, comprised of Australia’s large sugar producers. The Alliance initiated its campaign with a communique to the World Trade Organisation’s (WTO) ministerial conference, held earlier this month in the U.S. city of Seattle, Washington.

The private sugar industry representatives hope to make their voice heard in what is known as the “Millennium Round,” the convocation of which was never finalised due to the failure of the Seattle meeting.

“We hope it is just a temporary setback, that it can be overcome in two or three months,” said José Reinaldo del Bianco, advisor to the directorate of the Co-operative of Cane, Sugar and Alcohol Producers of Sao Paulo (Copersucar) in Brazil, who took part in the Alliance’s actions in Seattle.

But the pressure will fall on the WTO, even though it is not promoting the new round of talks, because countries have already committed to discussing and advancing agricultural free trade in Article 20 of the previous accord, the Uruguay Round, explained Del Bianco.

Cane sugar, produced primarily in developing tropical countries, has a big advantage over sugar produced from beets or corn in wealthier countries because it costs much less.

But this competitivity does not translate into reality due to the high tariff barriers, quotas and subsidies for internal production implemented by the United States, the European Union (EU) and Japan, according to Alliance’s Seattle communique.

These protectionist policies in wealthier regions lead to a world market with a growing surplus of sugar, causing the prices of the sweet product to plummet, lamented Del Bianco.

Brazil, as the world’s largest producer of cane sugar, exported 11.2 million tonnes in the last “sugar year,” ending in August. A global market without protectionism would allow the nation to bring in an additional 2.6 billion dollars annually in foreign sales, according to World Bank estimates.

Australia, with 3.75 million tonnes in sugar exports, and Thailand, with 3.2 million, are two other larger producers interested in opening international markets.

For Australia in particular, the liberalisation of markets is an absolute necessity because 85 percent of its sugar production is for export, observed the Copersucar economist.

Cuba, another major sugar exporter (3.2 million tonnes), is not part of the Alliance because only the private sector is represented in the group, which was created to support the governments and take parallel actions towards creating more liberal agricultural trade. Cuba’s sugar-producing sector is government run.

The world market would not be saturated if the EU, in addition to protecting its sugar-beet growers, had not exported 7.7 million tonnes of heavily subsidised sugar last year, maintained Del Bianco.

Trade liberalisation would create a 41 percent increase in international prices for refined sugar over the next six years, concludes a study by the Australian government, which also says that subsidies represent 40 percent of beet growers’ income in the United States and Europe.

The prices these farmers get for their sugar, thanks to subsidies, is 50 to 400 percent greater than the international market’s sugar prices, affirms the World Bank.

Experts believe it difficult to eliminate the distortions currently affecting the sugar market. The product has long been subject to protectionist barriers and excluded from free trade agreements.