EU sugar regime is attacked in the WTO

Australia and Brazil are to initiate action in the WTO against the EU sugar regime, according to the Australian Trade Minister, Mark Vaile, on August 16th 2002. Mr Vaile maintained that 'EU sugar subsidies have resulted in one of the least efficient producers becoming one of the largest exporters on the world market'. This he maintained resulted in the distortion of global market conditions and prices. Australia is seeking support from other members of the Global Sugar Alliance for the action it is pursuing through the WTO. The first stage of this action will involve mandatory consultations which should extend over a period of least 60 days, although it could run to over several months. On the basis of this consultation a decision as to whether to proceed with a formal request for legal adjudication will be made. Comment: This challenge, if successfully pursued in the WTO, is likely to result in stricter WTO limits on EU sugar exports, reducing the allowable refunded exports by an amount equivalent to the EU's preferential imports of ACP (plus Indian) sugar. This would not necessarily result in any pressure on the ACP quota, but it may simply (like similar developments in the rice sector) intensify pressure on EU member states to bite the bullet of sugar-sector reform, involving a shift from price support to direct aid payments. Any such process of reform would directly affect the value of ACP sugar preferences, with the European Commission having estimated that a 25% reduction in the EU sugar price would result in income losses to ACP sugar exporters of around € 250 million a year.Australia and Brazil are to initiate action in the..