Wednesday, July 13, 2005

Fight against sugar reform gathers pace

Opposition to the EU's proposed sugar reform is gathering strength with a blocking coalition of member states emerging. The nine main objectors are Poland, Italy, Spain, Ireland, Greece, Portugal, Finland, Latvia and Lithuania. Between them they have 132 votes which would be more than enough to block the plan as only 90 are required under qualified majority boting. Moreover, there are another five states who are waverers: Austria, Cyprus, the Czech Republic, Hungary and Slovenia.

The opposition states argue that the 39% cut in the intervention price over two years was excessive in its size and its timescale while the proposal to offer 60% compensation to farmers within the Single Farm Payment system was seen as insufficient, as was the compensation on offer for permanently ending production.

The drastic nature of the cuts was driven by the WTO dispute settlement mechanism decision that declared that much of the regime constituted in effect an export subsidy, plus the arrival of tariff free sugar from least developed countries under the Everything But Arms agreement in 2009. Practical politics dictates that some concessions on the plan will have to be made but not to the extent that it is unable to ready the EU for these changes.

Poland, which is a leading opposition state, was partially mollified by the removal of cross-border exchanges in quota, although that is exactly what should happen in an internal market. They were also given a relatively generous offer of a 300 000t increase in the isoglucose quota, an issue that they pressed hard on in the accession negotiations.

It is likely that the 60 per cent compensation level will eventually be raised, although that would mean cuts elsewhere in the farm budget. It might also just be possible to phase the price cut in over a longer period even though that would mean difficulties in meeting the WTO deadline.

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