WTO ruling on EU sugar subsidies must trigger serious reform, say Oxfam and WWF

Published: 1 November 2005

Brussels/Geneva: The European Union must radically reform its scandalous sugar regime, said Oxfam and WWF following today’s World Trade Organization (WTO) ruling that the EU has been illegally exporting too much subsidized sugar.

Brussels/Geneva: The European Union must radically reform its scandalous sugar regime, said Oxfam and WWF following today’s World Trade Organization (WTO) ruling that the EU has been illegally exporting too much subsidized sugar.

Following a complaint by Brazil, Thailand and Australia, the WTO today confirmed its January decision that the EU has been illegally exporting too much subsidized sugar, thereby undercutting more competitive producers overseas. The international development agency and the environmental organization say that the European Union will now have to face facts and reform its regime in a way that addresses the ruling and benefits poor countries and the environment.

“The writing has been on the wall for ages but the EU has been refusing to read it. Today’s ruling confirms that they have been breaking WTO law and seriously harming developing countries in the process. They must act quickly to introduce reforms that end export dumping and increase market access for the world’s poorest countries,” said Phil Bloomer, Head of Oxfam’s Make Trade Fair Campaign.

Elizabeth Guttenstein, Head of WWF’s European Agriculture Programme, added: “Unfair competition from EU sugar is not just a poverty issue. Sugar dumping depresses the world price and makes it difficult for sugar growers in developing countries to invest in better environmental practices like improved irrigation and preventing soil erosion and pollution. This ruling confirms that the EU has been acting unfairly for years and that it must end.”

Oxfam and WWF emphasized that the WTO ruling addressed the issue of subsidized European exports. It should therefore do nothing to threaten developing countries’ (ACPs) existing preferential access to the EU market.

The EU is discussing reform plans at the moment but Oxfam and WWF feel that these do not go far enough to address the WTO’s findings. They are calling for an immediate end to export dumping, a cut in EU production and improved access for the world’s poorest countries to European markets. They also want increased aid for developing countries to help them cope with the transition and invest in economically and environmentally sustainable sugar industries. The EU’s legislative proposals on sugar reform are expected in early July 2005.

Last month, another panel found that US cotton subsidies were also unlawful. Oxfam and WWF warned that if the EU and the US didn’t implement sugar and cotton rulings in good faith, this could jeopardize the entire round of WTO trade talks.

Contact Information

For further information:
Oxfam:
Louis Bélanger, Oxfam Press Officer, Brussels: 32 2 502 0391 or 32 473 562 260
Amy Barry, Oxfam Press Officer, Oxford: 44 (0)1865 312498; 44 (0) 07980 664397
WWF:
Catherine Brett, WWF Agriculture Communications Officer: 32 2 740 0936
Elizabeth Guttenstein, WWF Head of European Agriculture: 32 2 740 0924
The WTO panel main findings are:
The EU is dumping more than three times the level of subsidised sugar exports that it is allowed under WTO rules. (In the Uruguay Round, the EU committed to reduce its subsidised sugar exports to a maximum of 1.3 million tonnes per year. EC exports amounted to 4.1 million tonnes in the marketing year 2000/2001.) Around 2.1 million tonnes in 2004/5 according to EC figures of what the EU claims to be unsubsidised sugar (so-called non-quota or C sugar) are effectively cross-subsidised by the EU. The EU is contravening its WTO commitments by subsidising the re-export of an amount equivalent to imports of sugar from the African, Caribbean and Pacific (ACP) countries and India (1.6 million tonnes). These subsidised exports were not included in the EU’s reduction commitments and further exceed the EU’s permitted level of subsidised sugar exports.
The EU sugar regime is worth approx Euro 1.7 billion per year. A study published earlier this week by the LMC International on behalf of the Least Developed Countries’ (LDCs) Sugar Group said that developing countries could create up to 145,000 jobs and attract more than $500m worth of investment in their sugar industries if the EU agreed pro-development reform.