Sugar case victory on EU subsidies

The rec­om­men­da­tion of the Pan­el in the dis­pute between Aus­tralia, Brazil and Thai­land (com­plainants) and the EU (respon­dent) has—as usual—leaked. It’s a vic­to­ry for the com­plainants: bq.  ” … the WTO tri­bunal found EU domes­tic sup­port for sug­ar indi­rect­ly sub­sidised exports of sur­plus pro­duc­tion and vio­lat­ed the EU’s WTO com­mit­ment to lim­it export sub­si­dies.” (“Finan­cial Times”:http://news.ft.com/cms/s/b730711e-e645-11d8-a0df-00000e2511c8.html) This is an impor­tant case because it will help to lock-in the changes that the EU has offered in the Doha round nego­ti­a­tions. The EU has still to ful­ly work through the split among mem­ber states over the elim­i­na­tion of the use of export sub­si­dies. At best the deter­mined oppo­si­tion of France to any change could see the terms even­tu­al­ly agreed by the EU delay the elim­i­na­tion of the pay­ments and intro­duce oppor­tu­ni­ties for cir­cum­ven­tion. If this case con­tin­ues to go against the EU in the WTO Appel­late Body, France will find it even more dif­fi­cult to win the bat­tle inside the EU’s coun­cils. The gist of the com­plaint was that the com­plex EU sug­ar policy—which is based on dif­fer­ent ‘quo­tas’ for sug­ar, only one of which receives direct price support—results in a sub­sidy on sug­ar exports from the EU that exceeds the EU’s WTO-sched­uled ‘ceil­ing’ on these pay­ments. The EU per­mits for­mer colonies in the ‘African, Caribbean and Pacif­ic’ group of devel­op­ing coun­tries to sell into its high-priced mar­ket (although that’s “changing”:http://www.inquit.com/article/266/proposed-eu-sugar-reforms), reap­ing a con­sid­er­able mar­gin for their sales over the world price. But, effec­tive­ly, the EU uses export sub­si­dies to push these import vol­umes out again on to the depressed world mar­ket so that its inter­nal prices can remain high.

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