AGRICULTURE REPORT - Trade Dispute Over E.U. Sugar Subsidies

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AGRICULTURE REPORT - Trade Dispute Over E.U. Sugar Subsidies¹
By Mario Ritter

Broadcast: Tuesday, November 16, 2004

This is Gwen Outen with the VOA Special English Agriculture Report.

By some measures, these would seem like sweet times for the sugar industry. The world market for sugar is expanding. So is production.

Developing countries currently² produce more than two-thirds of all sugar. And they are expected to be responsible for almost all production growth through two thousand ten. This is shown in research by the United Nations Food and Agriculture Organization.

Yet the value of sugar exports has decreased. In nineteen eighty, it was almost ten thousand million dollars. By two thousand one, the value of sugar exports fell to six thousand million dollars.

The Food and Agriculture Organization says government intervention³ drives down world sugar prices. It says policies in the United States and the European Union are believed to have the most effect in limiting chances for growth. It says prices are kept high in their own markets, while prices on the world market are depressed⁴.

In July of last year, Australia, Brazil and Thailand took action in the World Trade Organization against the European Union. The three nations said European Union countries were giving more aid to their sugar producers than they had agreed to under W.T.O. rules. They said this aid was unfair and kept world prices down.

Brazil is the biggest producer of sugar from sugar cane⁵. As much as seventy percent of sugar is made from this plant. France is the biggest producer of sugar from sugar beets⁶.

Australia, Brazil and Thailand argued that the European Union guaranteed its sugar producers very high prices within its market. As a result, they said the producers were able to export surplus⁷ sugar at prices below their cost of production.

Also, the three nations said the European Union was giving more direct subsidies to its sugar producers than permitted. These payments are based on the amount of sugar imported into the union under special trade agreements with some countries. These countries include India, but they are mainly in Africa, the Caribbean and the Pacific.

Last month, the W.T.O. ruled the European subsidies illegal. The European Union immediately said it would appeal. But Agricultural Commissioner⁸ Franz Fischler says the E.U. needs reforms to make its sugar industry "more competitive⁹ and trade-friendly."

This VOA Special English Agriculture Report was written by Mario Ritter. This is Gwen Outen.