2004 - Demands from countries in development for a reform of the EU sugar regime
On 3rd March 2004, the Least Developed Countries (LDCs) called on the EU to put fairness at the heart of the new EU sugar regime.
With this reform, the EU will have to balance the interests of ACP sugar exporters and those of the small-scale sugar farmers in Europe.
Coinciding with this demand, a request for a closer examination of the EU’s export subsidies on sugar in the WTO was brought by Australia, Brazil and Thailand.
On 14 July 2004 the European Commission issued their proposal (COM(2004)499 final) to reform the sugar sector in Europe, which has been held as a defense argument to the claims that ACP countries have held in the WTO against the EC.
On the same date, the EC also issued a document with the facts and figures of the sugar reform.
A WTO panel issued a preliminary ruling on 4 August which was confirmed by the 8th September 2004 final ruling considering some of the EU’s sugar exports illegal.
DG Agriculture said in a press release that it is planning an appeal, action that has been supported by the European Committee of Sugar Manufacturers (CEFS).
However, European NGOs believe that the WTO ruling is a triumph for developing countries, and that it will help in building a sustainable international sugar market. At the same time, they criticise the EC’s proposal to reform the sugar sector because it will not help in towards this objective as it stands.
Commission press release: Statement of EU Agriculture Spokesman Gregor Kreuzhuber (8 September 2004)
See Oxfam briefing on "what the EU should do to make trad work for development"
2006
Adoption of a EU sugar regime by EU agriculture ministers
In June 2005, the EU Agriculture Commissioner, Mariann Fischer Boel, presented a legislative proposal for reform, which aims to bring the EU in line with the ruling of the World Trade Organisation on Eu sugar subsidies in April 2005, where EU subsidies were considered as in violation with the WTO Agreement on Agriculture.
In February 2006, EU ministers formally adopted a reform on the EU sugar regime.
Due to come into force in July 2006, the key point of the reform is that Member States agree to a 36% cut in the guaranteed minimum sugar price. The counterpart being generous compensation for farmers and the establishement of a Restructuring Fund to encourage uncompetitive sugar producers to leave the sector.
In order to implement this agreement, Member States have endorsed the European Commission’s proposal for a one-year cut of 2.5 million tonnes (13.6 percent) in sugar production in March 2006. Quite stinkingly, the cut will affect most those who procuded more sugar for export.
According to WWF which campaigned with Oxfam to ensure a fair EU sugar reform, some of their messages appear in the reform: Specifically, less sugar grown in the EU, an end to production beyond quotas and subsidised export subsidies which lower the world price for sugar and the establishment of environmental standards applied to sugar grown in Europe.
However, they regret that “the EU failed to take the opportunity to provide developing countries with sufficient aid to help them develop their sugar industries to make them more efficient and sustainable”.
2007 - Commission proposes changes to the sugar restructuring scheme because it is not working well
Following the 2006 reform of the sugar regime, where the European Commission proposed a restructuring scheme, the Commission recognises that the scheme is not attractive for sugar producers.
The main changes proposed are that the percentage of the aid given to growers and machine contractors should be fixed at 10 percent, but growers who renounce quota will get an automatic payment.
The Commission believes that the changes proposed should help towards reducing sugar production.
Commission press release on the proposal for an improved sugar restructuring scheme
Background on the EU Sugar regime reform
Established in 1968 within the framework of the Common Agriculture Policy, the EU sugar regime was set up to support European sugar growers and processors to enable them to compete with more efficient producers from the rest of the world. This means that the EU established systems of quotas, price support, export subsidies and trade barriers. In fact, this led rapidly to producing more sugar than needed.
Besides, it undermined the ability of poorer countries to compete with European-produced sugar and compete with the market.
For an analysis of the EU sugar regime, read the WWF briefing
