Financial Daily from THE HINDU group of publications
Saturday, Aug 24, 2002
Agri-Biz & Commodities
EU's sugar regime a spoilsport for ryots in poor countries
MUMBAI, Aug. 23
EVEN as the heads of various nations prepare themselves for the World Summit on Sustainable Development (WSSD) to work on a plan for the reduction of poverty, British development charity Oxfam has released a devastating report on the European Union's Common Agricultural Policy (CAP) sugar regime, in which it has alleged that the EU's taxpayers and consumers are paying over £1 billion a year to destroy livelihoods in the world's poorest countries.
According to Mr Phil Bloomer, Head of Advocacy at Oxfam GB, "The sugar regime is a clear example of Europe's blatant hypocrisy in dealing with developing countries... They pressurise poor countries to open their markets while protecting their own tariffs and subsidies."
"International trade has the potential to help lift millions of people out of poverty, but it will never do this as long as we continue with the current rigged rules and double standards like those maintained through the CAP," he said.
The Oxfam report says Europe, through quotas and tariffs, has set its sugar prices at roughly three times the global market price, resulting in huge surpluses each year that are dumped overseas backed by huge subsidies, thereby depressing global prices and driving other exporters out of third world markets.
More cost-effective sugar producers outside the EU, many of them among the world's poorest countries, are kept out of the `Sugar Club' through a whopping 140 per cent tariff imposed on imports into the EU. This barrier, in combination with the pressure exerted by the World Bank (WB) and the International Monetary Fund (IMF) on developing countries to slash their sugar import tariffs, has had a "devastating effect" on poor countries and ensured huge profits for EU's big farmers and sugar processors.
An analysis carried out by Oxfam has identified the EU as one of the world's highest-cost sugar producers and also the global leader in the export of white sugar, accounting for 40 per cent of the 2001 total.
The report more or less coincides in time with the charge made by Australia's Trade Minister, Mr Mark Vaile, that EU subsidies to sugar growers had allowed inefficient farmers to become major exporters, adversely affecting the interests of Australian growers.
This, in conjunction with the imminence of the WSSD, has galvanised the EU into a spirited defence of its CAP sugar regime which, incidentally, has not been included in the European Commission's current reforms proposals.
Responding to the charge that the EU subsidies for sugar producers has unfairly distorted world trade and ruined cane growers in some of the world's poorest countries, a EU spokesman, Mr Thorsten Muench, told the media on August 22 that the EU is taking the lead in opening its markets to Third World sugar imports.
According to Mr Muench, the EU is the world's biggest importer of sugar and had bought $833 million worth of sugar from developing countries in 2000 more than the combined total imports by the US, Japan, Australia and Canada.
He added, "We are confident that we are within the rules of the World Trade Organisation."
The EU's position, in essence, seems to be that its sugar regime in general and the relevant subsidies in particular strikes a judicious balance between the needs of developing countries and the interests of its own sugar industry which provides employment for over 4,00,000 people.
It cites the fact that it has entered into an arrangement under which 15 EU members have agreed to taper off all restrictions on sugar imports from 48 of the world's poorest countries from 2006 to buttress this position.
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