Tuesday, November 01, 2005

Group opposed to sugar reform grows

Poland has joined the eleven countries led by Spain who are opposed to the Commission's proposals for reform of the sugar regime. Just four of the opposing countries - Greece, Italy, Poland and Spain - would be enough to block reform under the qualified majority system.

This latest development is causing concern in the Commission and the UK presidency. The WTO has declared the current regime illegal and the current regulation expires next June which would lead to chaos if nothing is put in its place.

The Commission has to think of some way of buying off opposition without rendering the whole reform pointless. The opposing states are calling for smaller price cuts over a longer period with more compensation and it is difficult to see how this can be squared with the WTO judgement or the EU budget.

It might be possible to include the option of partial decoupling for states such as Italy who feel they are worst hit by the price reduction, although it is questionable whether keeping small Italian sugar producers in business is compatible with the spirit of the reform. Certainly national compensation envelopes for sugar producers are still under consideration, but the sweetener would have to be significant.

A further complicating factor is that the opposition countries are suggesting that cuts should be applied initially just to regions with a surplus of production. If one interprets that as countries with B quotas, leading sugar producers would be hit, notably France and Germany where up to 20 per cent of overall production quotas are B quotas.

So this is all about winners and losers rather than a rational reform strategy that would be helpful for the EU as a whole. As June approaches, no doubt some sort of reform, with more side payments, will be devised.


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Hatty Sauce said...

Thank you so much for setting up this blog. I wish you every success with it. I'm posting using my daughter's blog account (my real name is Julian).

Anyway, to sugar! The proposed EU sugar reform for 2006/2014 would lavish an eye-watering total of around 17 billions of euros of EU taxpayers' money on sugar beet farmers and processors to cushion them from the effects of the sugar price cuts, whilst the EU refiners would be similarly protected by means of unfair restrictions applied to imported raw sugar.

Now, as your excellent blog highlights, to add insult to injury, the Commission seems ready to propose to increase even further these eye-watering sums in order to buy agreement in the Agriculture Council.

Meanwhile, the message for the developing countries is that nothing can be done, not least owing to lack of agreement on the EU's "Financial Perspectives" (why can money be readily found for EU farmers in 2007/14 but not for farmers in African, Caribbean and Pacific countries?).

So for all practical purposes, the ACPs and LDCs seem doomed to be sent away with absolutely nothing but concrete proof that the EU simply doesn't care a fig about the achievement of the Millennium Development Goals. It is inevitable that such incontrovertible evidence of the EU's real development motives will colour their judgement in negotiations in Hong Kong and as regards the Economic Partnership Agreements, to the clear detriment of EU businesses (but since when did the Lisbon agenda mean anything?).

As recently demonstrated by Mrs Glenys Kinnock, MEP, and Mr Jean-Claude Fruteau, MEP, (see here and here) there are alternative models of EU sugar reform which would be much fairer to all stakeholders, including to consumers and taxpayers, if only the Commission and Agriculture Ministers during their negotiations on sugar in November, would be able to show leadership, compassion and responsibility to the wider world.

But I don't think anyone's holding their breath!