Bridges Weekly Trade News Digest • Volume 8 • Number 9 • 10th March 2004
Fischler Presents EC Sugar Reform Concept To LDCs
At a Least-Developed Country (LDC) Sugar Conference held in Brussels on 3 March, EC Agriculture Commissioner Franz Fischler outlined Europe’s main criteria for reforming its protected and subsidised sugar sector. Fischler opened his speech by noting that reform was unavoidable for four reasons. First, the sugar regime is "in complete disharmony" with the overall reform of the EC’s Common Agricultural Policy (CAP), which focuses on decoupling domestic support. Second, the regime is being criticised externally by the EC’s trading partners for causing distortions through its high border protection and export subsidisation. Third, completely duty- and quota-free access for sugar imports from LDCs — to be phased in between July 2006 and July 2009 under the Everything But Arms (EBA) initiative — will challenge the current quota and production scheme. Finally, the pending WTO case against the EC’s sugar regime (see BRIDGES Weekly, 17 July 2003) may have "severe implications" for African, Caribbean and Pacific (ACP) countries and the level of EC quotas.
Fischler highlights needs for compensation
Elaborating on three possible options for sugar reform outlined in a Commission paper of 23 September 2003 (see BRIDGES Weekly, 25 September 2003) — i.e. status quo, price reduction, and full liberalisation — the Commissioner explained that the EC would have to consider its international obligations on the one hand, but also the need to compensate both EC producers and ACP countries for losses due to price and quota reductions. Sources reported that Fischler himself said that under the full liberalisation option European sugar production would decrease by 75 percent. According to the European beet growers association (CIBE), some 500,000 jobs depend on the EC sugar regime. In a January paper, Oxfam International stated that it would support price reduction or fixed quota models, provided they would end export dumping, "ensure reasonable levels of market access to northern markets for developing country agricultural exports — particularly from the poorest countries," and "promote socially and environmentally sustainable rural sectors in northern and southern countries".
LDCs express concern over reform plans
At the meeting, ministers from Bangladesh, Mozambique, Nepal and Sudan expressed their concern with the proposed reform. Sudanese trade minister Abd al-Hameed Musa Kasha said at the meeting that the reform in 2006 could seriously hurt the poorest and most vulnerable developing countries, as LDCs currently get preferential treatment under the EBA. In a situation of free competition, stronger developing countries such as Brazil and the Balkan states would likely crowd out the LDCs on the EC market. Kasha noted that ”Only by allowing us to sell sugar at a certain guaranteed price can EBA become meaningful to our economies”. Currently, sugar, rice and bananas are the only products under quota under the EBA. These quotas will be phased out between 2006-2009.
According to Fischler, the European Commission is to table a proposal for sugar reform before the end of this summer. In the meantime, EC Agriculture Ministers will meet on 22 March to discuss the Commission’s three-option model.
"The planned reform of the EU’s sugar regime and developing countries," EU PRESS RELEASE, 3 March 2004; "Fischler muses on sugar reform," BAKERYANDSNAKS.COM, 4 March 2004; "Sugar Reforms Turning Bitter," IPS, 8 March 2004.