“Without needs the EU murders existences!“ is written in big letters on bills in my homevillage in Germany, which is dominated by agriculture. Most of the farmers earn at least some parts of their income out of selling sugar beets. On the other hand 1000km away in Brussels José Manuel Barroso, President of the European Commission, who doesn’t miss to repeat in any interview the same requirenment: "It's not only about agriculture, it's about services, it's about industrial products, it's about intellectual property rights," he is insisting. The following Policy Paper is going to show why the sugar subsidies are such a sensitive and important issue and which results the forthcomming reforms of the Common Market Organization (CMO) for sugar will have.
On the 24th of November the European Union Agricultural Ministers agreed on a new cornerstone in the discussion about the reform of the CMO for sugar. Within the recent months the attention about this reform has grown constantly. On one side the affected farmers (especially in France and Germany) of the EU that didn’t want to give up the current status quo; on the other the developing countries that increase their pressure on the EU to open up markets. In respect of the negotiations in the current world trade rounds, which got stuck, the EU was obviously willing to sacrifice a pawn in order to strengthen its position in the negotiations of other (more profitable) topics (e.g. Trade and Services). Due to the delicate history with failures of the Ministerial Conferences in Seattle (3rdConference), the partial failure of Doha (4thConference) and finally Cancun (5thConference) the Honk Kong meeting should deliver a more significant outcome in this topic. Otherwise the whole GATT respectively the WTO-system might be on disposition. In addition it is important to note that the sugar sector is the only agricultural sector that hasn’t been affected by both of the two big WTO reforms in 1992 (McSharry Reform) and in 2003 at all. But why is the sugar production such a sensitive topic at all?
Table of Contents
1 INTRODUCTION
2 SOME BACKGROUND INFORMATION
3 EU AND THE ROLE IN THE INTERNATIONAL SUGAR TRADE – THE STATUS QUO
3.1 IMPORTS
3.2 EXPORTS
3.3 EXPORT SUBSIDIES
3.4 WHO HAS TO PICK UP THE TAB?
3.5 CONFLICTS ABOUT EU SUGAR “DUMPING”
3.6 BRAZIL CLAIMS AT THE WTO AGAINST THE SUBVENTION OF SUGAR EXPORTS
3.7 ENVIRONMENT – ANOTHER IMPORTANT POINT
3.8 EVALUATION OF THE (SO FAR VALID) SUGAR MARKET REGULATION
3.9 SUGGESTIONS FROM MANY DIFFERENT PARTIES HAVE BEEN MADE WITHIN THE LAST YEARS
4 EU AND THE ROLE IN THE INTERNATIONAL SUGAR TRADE – FINALLY, THE CHANGE
4.1 FURTHER RESULTS OF THE NEW STEP
4.2 CONSEQUENCES FOR THE COUNTRIES WORLDWIDE
5 CONCLUSION
Research Objectives and Key Topics
This paper examines the impact of the European Union's Common Market Organization (CMO) for sugar on international trade and the implications of its recent structural reforms on both EU producers and developing countries.
- The historical role of the EU as a major, yet highly subsidized, actor in the global sugar market.
- Conflicts regarding international trade regulations and WTO legal disputes initiated by countries like Brazil.
- The tension between EU protectionist policies and the interests of sugar-producing developing nations.
- Environmental concerns associated with intensive sugar production methods.
- Analysis of the 2005 structural reform measures and their long-term consequences for global sugar trade dynamics.
Excerpts from the Book
3.6 Brazil claims at the WTO against the subvention of sugar exports
In August 2003 Brazil complained officially at the World Trade Organization about the EU sugar subsidies. Australia and Thailand joined in the same year the inquiry. Brazil remarks that the given grants distort the competition and harm especially the efficient producers like Brazil (see USDA, Foreign Agricultural Service 2003). Different Non-Government Organizations like Oxfam estimated that the sugar export dumping translated into foreign exchange lead to losses of $494 Mio for Brazil, $151 Mio for Thailand, and each for South Africa and India in 2002. On the 4th of August 2004 the WTO declared that the appropriate WTO panel has made a preliminary decision. The competent experts conceded that Brazil is right. The panel calculated that the EU subsidised 4.1 Mio tonnes sugar exports (2000/01), although it committed itself during the Uruguay Round to subsidise a maximum of just 1.3 Mio tonnes per year. Since then many things have been set into motion. Until last week the EU had always declared they would officially protest against the WTO, in case the final decision confirms the preliminary one. However, the recent development is quite pleasing. Caused by the increasing pressure and the findings of the WTO the European sugar beet farmers had to reckon with an end of the present sugar export politics. In my eyes it was just a question of time, when the EU had to give in and to make structural reforms. Otherwise they would not achieve any further progress in the negotiations of other topics and would also make the whole WTO system quite questionable. A cut of several million tonnes of the domestic sugar production was unavoidable.
Summary of Chapters
1 INTRODUCTION: This chapter highlights the political and economic sensitivity of the EU sugar sector and introduces the necessity of reforming the Common Market Organization (CMO) due to international and WTO pressures.
2 SOME BACKGROUND INFORMATION: It provides an overview of the global sugar market, detailing production differences between sugar beets and cane, and explains the historical context of EU subsidies and market protectionism.
3 EU AND THE ROLE IN THE INTERNATIONAL SUGAR TRADE – THE STATUS QUO: This chapter analyzes the mechanisms of the EU sugar market, including quotas, price supports, and the impacts of subsidized exports on global trade and developing economies.
4 EU AND THE ROLE IN THE INTERNATIONAL SUGAR TRADE – FINALLY, THE CHANGE: It details the wide-ranging structural reforms agreed upon in 2005 and discusses the anticipated consequences for EU farmers and the global trade landscape.
5 CONCLUSION: The author summarizes the necessity of the reforms while cautioning that the changes are not a "win-win" scenario, as the impacts will vary significantly across different stakeholders and regions worldwide.
Keywords
European Union, Sugar Market, Common Market Organization, WTO, Export Subsidies, Sugar Beet, Sugar Cane, Trade Policy, Protectionism, Developing Countries, ACP Countries, Agricultural Reform, Market Liberalization, Dumping, Sustainability
Frequently Asked Questions
What is the core subject of this paper?
The paper examines the European Union's historical sugar policy and the significant structural reforms initiated to align its sugar market with global trade regulations and the requirements of the WTO.
What are the primary themes discussed?
Central themes include the impact of EU production quotas and export subsidies on global prices, the legal conflicts initiated by countries like Brazil at the WTO, and the socio-economic effects of these policies on developing nations.
What is the primary objective of the research?
The main objective is to analyze how the EU's sugar policy created market distortions and to evaluate the anticipated consequences of the 2005 reforms for various stakeholders, from EU farmers to global sugar producers.
Which scientific methodology is used?
The paper utilizes a policy analysis approach, examining official reports from the EU Commission, WTO rulings, data from the USDA, and independent assessments from NGOs like Oxfam and the WWF.
What is covered in the main body of the text?
The main body focuses on the mechanics of the EU sugar regime (quotas, minimum prices), the international disputes (specifically the Brazilian complaint), environmental impacts, and a detailed breakdown of the 2005 reform package.
Which keywords characterize this study?
The paper is characterized by terms such as trade liberalization, agricultural policy, global sugar trade, export dumping, and structural reform of the Common Market Organization.
How did the WTO influence the EU sugar policy?
The WTO acted as a crucial catalyst for reform, particularly through the complaint by Brazil regarding excessive export subsidies, which ultimately forced the EU to reconsider its production-quota and subsidy systems.
What are the implications for the Least Developed Countries (LDCs)?
The reforms are expected to provide LDCs with better access to the EU market, particularly through the EBA (Everything But Arms) agreement, allowing them to benefit from tariff-free exports.
How does the paper differentiate between beet and cane sugar producers?
It identifies that developed countries (like the EU) protect their high-cost sugar beet industries, while efficient cane producers in the tropics have historically suffered from market distortions and lower global prices.
- Quote paper
- Björn Eller (Author), 2005, The EU and the World Market for Sugar - Finally Sweets for the Developing Countries?, Munich, GRIN Verlag, https://www.grin.com/document/50469
