EU pressed to reform sugar policy after WTO ruling

The European Union is under growing pressure to reform its sugar policy after the WTO ruled against its export subsidies, but cracks in the 25-state bloc cast doubt about reaching an agreement before a key WTO meeting in December. Following a World Trade Organisation ruling in late April against major elements of the EU sugar subsidies, France and Germany last week expressed cautious support for the European Commission's determination to forge an agreement this year. The two countries represent almost 50 percent of EU sugar production. Their farmers, the most competitive of the 25 countries, are the most likely to protest the EU executive arm's recommendations of reductions in guaranteed prices and production quotas.
Concerns about the impact of the WTO ruling spill ovaer into a number of the EU's trade partners, notably regarding compensations for those negatively impacted.
Also affected are the developing countries in the ACP grouping of Africa, the Caribbean and Pacific basin, which currently have preferential access to EU markets and fear the changes ordered by the WTO could cripple their local industries, whose profits rely on high European prices.
The planned EU sugar policy reform had been put on the backburner in July 2004 amid deep divisions. But reform took on new urgency after a WTO ruling on April 28 against the EU subsidies in a complaint lodged by Australia, Brazil and Thailand, all major sugar exporters.
The WTO found that the EU's subsidised exports had been exceeding an agreed 1,273,000-tonne-a year limit by almost five times since 1995.
The ruling confirmed an earlier WTO finding in October against the EU, which the commission had appealed. The EU agriculture commissioner, Mariann Fischer Boel, has made it a top priority to get an agreement on sugar policy reform ahead of a meeting of ministers from the World Trade Organisation in mid-December in Hong Kong.
"Now that we know the WTO decision, there is no desire to delay the implementation of reform," Dominique Bussereau, the French agriculture minister, said on the sidelines of a meeting on May 9 of his EU counterparts in the Luxembourg city of Dickweiler.
Bussereau indicated the reform indicated was "not unfavourable" to the French government, "on condition that it takes into account certain social consequences" for small sugar producers and the "special case" of producers in the island states of the Antilles and Reunion.
Voicing a clearly liberal approach, the Danish farm minister, Hans Christian Schmidt, called for a "true reform". Spain and Italy, leading a dozen countries, opposed in November the reform plan, saying it veered from the fundamental principles of the EU's Common Agricultural Policy.