HOW SWEET IT IS:

Ruling jolts EU sugar producers (Stefania Bianchi, 8/06/04, Asia Times)

Civil-society groups have hailed as a triumph for developing countries a World Trade Organization (WTO) ruling on Wednesday that the European Union is illegally dumping millions of tonnes of subsidized sugar on world markets. But if the ruling is accepted, it could force the EU to slash its sugar subsidies abruptly. And for big sugar producers such as France, Germany and Poland, that would create real problems for both farmers and politicians.

In a case brought by Brazil, Thailand and Australia against the EU, the WTO's dispute-settlement body, the world's trade court, ruled that EU subsidies help farmers cover their fixed costs and enable them to produce additional amounts of sugar at low additional cost, which they then sell on international markets.

The ruling also found that the EU exports up to 5 million tonnes of sugar each year despite making a commitment under the Uruguay Round of trade talks to reduce its subsidized exports to just over 1 million tonnes a year.

Interest groups say government subsidies like these give European farmers an unfair advantage in global export markets. According to the international relief organization Oxfam, the EU reduces world sugar market prices by 23%. In 2002 this led to foreign-exchange losses of about US$494 million for Brazil, $151 million for Thailand, and $60 million each for South Africa and India.

After all their squealing about steel, let's see how much the Euros like free trade.

Posted by Orrin Judd at August 5, 2004 12:32 PM