ACP SUGAR PRODUCERS DISAPPOINTED WITH EU COMPENSATION

Eighteen sugar producing countries from the African, Caribbean and Pacific (ACP) Group have expressed disappointment at what they deem to be inadequate compensation for the loss of revenues resulting from the EU's sugar reform process. Under the reform, which was prompted in part by an April 2005 WTO ruling against its sugar regime (see BRIDGES Weekly, 4 May 2005), the EU is cutting the price that it pays domestic and ACP sugar producers by 36 percent. The reduced trade preferences are expected to cost the ACP countries roughly EUR 265 million per year. The daily Jamaica Gleaner reports that an EU spokesperson indicated on 4 May that Brussels' compensation to ACP sugar growers is likely to be EUR 165 million in 2007, down from promises of EUR 190 million made on the eve of the December 2005 WTO Ministerial Conference in Hong Kong. The EU did suggest that grants would average EUR 184 million annually from 2007 to 2013 in spite of budget cuts. EU sugar producers will receive EUR 6 billion over the same period.

Some Caribbean ACP countries appear to be addressing the fate of their sugar industries by diversifying into ethanol production in the hope of taking advantage of the growing market for it as an alternative motor fuel in the US and Europe.

In a related development, the EU has announced that from 23 May it will reduce its exports of excess-quota sugar in accordance with the ruling, as per the 22 May deadline set by a WTO arbitrator in October 2005 (see BRIDGES Weekly, 30 November 2005). After this date, Brussels will cease to issue new export licenses for excess-quota sugar. The European Commission insists that its decision to allow exports to continue for three months under licences issued prior to the deadline will not affect compliance.

ICTSD reporting; "EU finalises compliance with WTO ruling on sugar," FINANCIAL EXPRESS, 4 May 2006; "EU sugar reform - an uphill battle for survival for the ACP," MAURITIUS TIMES, 5 May 2006; "Poor sugar growers face scaled-down EU aid," FINANCIAL TIMES, 4 May 2006; "On defensive over aid promises," NATIONNEWS.COM (BARBADOS), 2 May 2006; "Caribbean Cane Producers Turn to Ethanol," FINANCIAL TIMES, 1 May 2006; "EC nears agreement for Caribbean funds," JAMAICA GLEANER, 7 May 2006.

MANDELSON OUTLINES EU'S POST-DOHA TRADE AGENDA

The EU may pursue bilateral and issue-specific trade agreements after the conclusion of the Doha Round at the WTO, EU Trade Commissioner Peter Mandelson implied on 4 May.

In a speech to business and political leaders in Wolfsberg, Switzerland, he said that EU trade policy would take "a decidedly hard-headed approach to ensuring that markets are genuinely open and that international rules are applied openly and transparently."

Mandelson said that the EU's approach, which the European Commission will set out in a formal report this autumn, will call for a "new strategic approach to market access" focusing on reducing tariffs and non-tariff barriers to goods and especially services. "We need to ensure we have the tools available to respond to unfair barriers -- be they local standards, restrictions on competition, or discrimination in public procurement."

Many of these barriers are not currently the subject of WTO disciplines. While describing the Doha Round negotiations as his "paramount priority," Mandelson said that the contentious talks had shown that "in trade policy there are opportunities to build on what is put in place multilaterally." He said that the EU "can and should go further in pursuing the needs and interests of European businesses in particular parts of the world, or in particular areas of policy," especially in Asia.

Describing China as "the biggest single challenge of globalisation in the trade field," Mandelson indicated that the rising economic giant would feature prominently in the EU's commercial relations post-Doha. "Europe must get China right -- as a threat, an opportunity, and prospective partner," he said.

The EU trade chief indicated that he would also review the operation of anti-dumping measures, "to ensure that such rules are adapted to the complexity of global markets."

EU Trade Commissioner Peter Mandelson's speech is available at http://europa.eu.int/comm/commission_barroso/mandelson/speeches_articles/mandelson_sptemplate.cfm?LangId=EN&temp=sppm096_en.

ICTSD reporting.