The European Unions regime for subsidizing sugar farmers was declared illegal by the World Trade Organization Wednesday in a landmark ruling that will severely curtail dumping of excess production on global markets, according to the World Bank press review Thursday.
Brazil, Australia and Thailand were claiming victory Wednesday night after a preliminary WTO finding that the EU had affected the livelihoods of farmers in the rest of the world by breaching agreed limits on financial support for exported sugar.
Coming just three days after the WTOs 147 members agreed to cuts in farm support as part of an attempt to broker a new trade liberalization deal, the ruling in Geneva was seen as an important breakthrough in the fight to reduce western protectionism.
The sugar ruling provided Brazil with its second WTO victory over the West this year. In April, the body that polices world trade told the United States that much of the aid for 25.000 American cotton farmers was illegal.
Brazils agriculture minister, Roberto Rodriguez, said the EU would have to cease exporting 2 million tons of sugar starting from next year because of the ruling, and that Brazil would export 10 percent more. Brazil is the worlds largest producer and exporter of sugar.
The interim ruling by the WTOs disputes panel found that the EU was exporting four times the permitted amount of subsidized sugar on world markets each year, depressing world prices and costing Brazil, Thailand and Australia hundreds of millions of dollars in lost foreign exchange earnings.
The WTO ruling is likely to give a lift to EU agriculture commissioner Franz Fischler, who last month proposed extensive changes to EU sugar subsidies, including cutting support prices and exports. Fischlers plan has run into resistance from some members of the 25-nation block, most notably France, which fears the loss of thousands of jobs.
Oxfam on Wednesday lauded the initial ruling as “a triumph for developing countries and a death knell for unfair EU sugar export subsidies….The European Union is illegally dumping millions of tons of subsidized sugar on world markets and destroying poor farmers livelihoods,” the British-based charity said.
Oxfam said the European Union should make immediate reforms to its sugar sector “in a way that benefits poor countries.” In 2002, Oxfam said, the EU strategy created losses of nearly 500 million US dollar for Brazil, 151 million dollar for Thailand and 60 million dollar each for both India and South Africa.
The panel ruled that EU aid to re-export 1,6 million tons of sugar imports from African, Caribbean and Pacific countries and India, also exceed amounts permitted by the WTO. But the decision does not affect the European Unions right to import sugar from these regions on preferential terms, something the ACP and India had feared.
Under WTO rules, the preliminary ruling remains confidential until finalized in a formal decision next month. In practice, WTO panel decisions rarely differ from their preliminary rulings.
The WTO ruling will probably be published in September and an appeal will be decided within three months. The EU will then be given a deadline to comply or face sanctions.
Kilde: www.worldbank.org
