Bittersweet

ec sugar reform proposal doesn't please anyone

 
Published: Tuesday 31 August 2004

the European Commission (ec), the eu executive arm, has attempted to reform the 35-year-old system of European countries for managing their domestic sugar. This is the first time such a step has been taken. On July 14, 2004, the ec proposed cuts in the price at which it intervenes to support producers and in the sugar quotas eligible for this support. But in partly compensating for revenue losses, it is effectively reducing support by only 13.3 per cent and not by one-third, as it claims. Not surprisingly, civil society organisations are outraged. The sugar industry, on its part, claims that not only would its profits dip by nearly 30 per cent, 83,000 people would also lose their jobs.

The eu has been severely criticised in recent times for distorting international trade and harming developing country exports. The ec proposal aims to address this problem. Franz Fischler, eu agriculture commissioner, said: "Consumers will see much more market orientation and developing countries much less trade distortions." But civil society groups like Oxfam and wwf International disagree. They claim the proposal has nothing to do with poverty alleviation or environmental concerns. "After decades of waiting for reform, this is a half-hearted effort," alleged Elizabeth Guttenstein, head of the wwf Agriculture Program, in a joint press release by the two organisations. They demanded an immediate elimination of all forms of direct and indirect export subsidies, end to sugar dumping in the international market and increase in imports from the poorest countries at remunerative prices.

Countries like Ireland and the Nordic nations have also challenged the proposal, saying it would kill their domestic sugar industry. The Italian Farming Federation has called the proposal "unacceptable". It claims that the reference price for intervention has been reduced "excessively" and the decrease in sugar beet prices is "too large". Wirtschaftliche Vereinigung Zucker, a German trade group, said the proposal has endangered the future of European beet and sugar production.

Some non-eu countries, such as those from African, Caribbean and Pacific nations group and India would also lose from the proposal. They enjoy preferential access to the eu market under bilateral arrangements and receive a refund of the difference between the eu domestic price and the international price. With the domestic reference price dropping, the amounts they would receive as refunds would also decline. The ec has proposed initiating a dialogue with these countries before the end of 2004 to identify measures to deal with the setback.

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