Economy & Trade, Europe, Headlines

TRADE-EU: Sugar Reforms Turning Bitter

Stefania Bianchi

BRUSSELS, Mar 5 2004 (IPS) - A group of developing countries is asking the EU to increase limits on duty-free sugar imports over the next ten years.

Ministers from Sudan, Mozambique, Bangladesh and Nepal want the current limit on duty-free imports of less than 100,000 tonnes to be increased to more than 1.4 million tonnes by 2013, a figure they see as “negligible” in European terms.

Sudanese trade minister Abd al-Hameed Musa Kasha told a three-day conference on sugar organised by a group of Least Developed Countries (LDCs) this week that liberalisation of the EU sugar market planned for 2006 could seriously damage poor countries.

Poor countries get preferential treatment at present under the 2001 Everything But Arms (EBA) initiative. This allows duty-free access for products from least developed countries.

“Only by allowing us to sell sugar at a certain guaranteed price can EBA become meaningful to our economies,” Kasha told media representatives ahead of a meeting with EU farm commissioner Franz Fischler.

The group fears that loss of preferential access could mean they are pushed out of the market by producers from more developed countries, or industrial producers.

The EU is the world’s biggest importer of sugar, and in 2000 bought 833 million dollars worth of sugar from developing countries – more than the combined total imports by the United States, Japan, Australia and Canada.

LDC sugar producers could face strong competition from other major sugar suppliers from Brazil and the Balkans if they lose their preferential quotas.

Under the current EU sugar policy producers from the EU are guaranteed a minimum price two to three times the world market price (730 dollars a tonne at present compared to the market price of 243 dollars a tonne). But this is tied to quotas. For sugar produced above this quota, farmers receive the world market price.

High tariff levels stop cheaper sugar pouring into the EU, but the least developed countries receive preferential access.

The EU currently spends 1.7 billion dollars a year supporting its sugar producers. The money guarantees internal sugar prices besides putting up tariffs.

The European Commission, the EU executive, presented three possible scenarios for reforming its sugar sector last September – leaving the regime as it is, providing a price reduction, or full liberalisation of the sugar market.

“Total liberalisation would torpedo the meaning and essence of the EBA for us,” Kasha said. “We want to preserve the status quo in the EBA initiative with some modifications. We are not saying we don’t want total access. We want to delay that by ten years.”

Such an extension would see the LDC sugar export to the EU maintained at the annual level of 197,000 tonnes.

“The new European sugar regime must put an end to sugar dumping and allow the poorest countries to benefit from substantial access to the European market,” Jo Leadbeater, head of Oxfam’s EU advocacy office said in a statement. “It is high time for the EU to stop overproduction and promote a sustainable sugar sector in Europe.”

Oxfam says vulnerable farmers in the EU should be protected, but it is calling on the EU to end misuse of subsidies.

“Radical reform is necessary in the sugar sector to prevent big corporations like British Sugar raking in millions at the expense of poor farmers, consumers and the environment,” Leadbeater said. “It is time the EU sugar cartel of major processors and big farmers was brought into the real world.”

Fischler told the sugar conference that reform of the EU sugar regime was “unavoidable.” He spoke of “internal criticism of the support system for lack of competition, high domestic prices, quota rigidities and no market orientation” as key factors in the moves to a more liberal regime.

The reform proposal was several months away, but “reflection, based on extended impact assessment, is ongoing,” he said.

Agriculture ministers will discuss the Commission’s proposals later this month. The Commission is expected to draw up a final proposal in June.