EU sugar deal gets sweet and sour response

Europe's controversial overhaul to EU subsidised sugar prices has generated a sweet and sour response.

EU agriculture ministers agreed to cut sugar subsidies by 36 per cent over four years on Thursday.

This was instead of an initial plan for 39 per cent cuts and came as a concession to 11 of the 25 member states who opposed the move.

The last minute softening of the plans cut the opposition countries down to just three – with Poland, Latvia and Greece refusing to endorse the compromise.

EU officials say the deal will allow farmers who turn their backs on sugar production to recover 64.2 per cent of revenue due to the price cuts.

WTO bargaining chips

European Agriculture Commissioner Marianne Fischer Boel argues the cuts give Europe more bargaining power at WTO negotiations in Hong Kong next month.

“If we didn’t have a proposal in the pocket, we would have nothing to defend,” she told reporters on Thursday.

“This will strengthen our hand at next month’s WTO ministerial.”

The cuts are designed to cut EU dumping of sugar on the world market after the practice was successfully challenged by Australia, Brazil and Thailand at the WTO.

The global trade association forced Brussels to reform its nearly 40-year-old sugar policy after declaring it illegal.

Sugar lobby groups in Australia have welcomed the deal saying it will increase competition and cut European sugar production by 20 per cent.

"There's a lot more optimism, a lot more confidence in our industry going forward," a spokesman for sugar lobby group Canegrowers said.

Sweet and sour

But in Europe, the UK Industrial Sugar Users Group says last-minute concessions have left a bitter taste in the mouth. They argue that EU prices are still about double that in the rest of the world.

"This deal takes the easy way out by simply dumping increased compensation costs on consumers and industrial users," it said.

Sugar companies were last night assessing the impact of the revised proposals, but are largely expected to welcome them as being less severe than those tabled in June.

Greencore, the Irish sugar group, said last night that it welcomed "the improved phasing of the new pricing arrangements".

ACP disappointment

But the African, Caribbean and Pacific (ACP) group of countries insist the deal is not all sweetness and light.

ACP states had benefited from a preferential sugar protocol and say the plans could devastate producers.

It is feared the move could be a double blow when coupled with planned reform of the EU's import rules for bananas.

ACP states have also denounced the proposed compensation scheme, envisaged at €40 million for 2006.

NGO anger

The NGO world is also frustrated by the deal which it says does nothing to help the world’s poorest.

“Developing countries have been sacrificed in order for Europe to reach a deal,” Oxfam said in a press release on Thursday.

“The commission has hurled money at its member states to convince them to sign up but has abandoned some of the world’s poorest countries to destitution.”

“At the very least, ministers must agree adequate long-term compensation to ameliorate the effects of this harsh reform at their heads of state meeting next month.”

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