WTO panel and EU Sugar: Oxfam challenges Europe to deliver on its promises

The European Union must offer better compensation to developing countries that have suffered from sugar reform, said international agency Oxfam on the day that the EU is due to comply with a World Trade Organization (WTO) panel ruling against its sugar subsidies.

So far the EU has promised African Caribbean and Pacific (ACP) countries a package of €40m (US$51m) for 2006. The money – unlikely to be received in-country until 2007 – will be given to 18 sugar exporting countries to absorb the shock of a 36% price cut agreed as part of the reform in November 2005.

Oxfam says this is not enough. Losses for some of the world’s poorest countries could amount to nearly €265 million ($338m) annually, and money is needed now to help countries to prepare for transition. Talks on the 7-year package that ACP will receive as part of the Financial Perspectives (EU Budget from 2007-2013) include annual figures ranging from €130m to €190m.

In comparison, EU farmers and industry are set to receive more than €7bn ($8.9bn) over the same period of time.

Luis Morago, Head of Oxfam International’s Brussels office said: “The vast gap between what is being offered to European farmers and companies and what is being talked about for African, Caribbean and Pacific farmers shows just how skewed the EU’s priorities are, and where the weight of lobby pressure is coming from. The EU must commit to increase the ACP compensation and to deliver it in a timely and efficient manner.”

Dr Paul Goodison of the European Research Office added: “The European Commission must deliver aid in-country in months not years to help smallholder farmers and retrenched workers already affected by the reform. In tiny Swaziland alone, some 5,000 smallholders are on the edge of bankruptcy, while 3,000 workers have been retrenched with the immediate loss of not only wage income but also housing, healthcare and education. The EC’s “business as usual” approach isn’t good enough.”

Oxfam says that unless the EU agrees a fair compensation package for the ACP it will send a negative signal to the WTO, where talks are already in jeopardy, partly as a result of EU reluctance to open its markets.

Luis Morago of Oxfam International: “Europe may claim to have complied with the letter of WTO panel ruling but the way they have implemented the reforms betrays the spirit of a development round. They can redeem themselves by ensuring a decent package of compensation for the ACP and improving their offers at the WTO where the talks are in danger of collapse due to rich countries’ intransigence and unfair demands.”