Brazil Claims Victory After WTO Ruling on EU Sugar Subsidies

6 August 2004

In its preliminary ruling released on 4 August, the WTO dispute settlement panel assessing the legality of EU sugar subsidies supported complaints put forward by Brazil, Australia and Thailand, thereby adding further pressure on the trading block to reform its heavily subsidised sugar regime (see BRIDGES Trade BioRes, 23 July 2004). The interim ruling comes more than one year after the three countries had launched a launched the case, alleging that the EU provided export subsidies to its sugar producers in excess of the levels it had committed to in the WTO agreement (see BRIDGES Weekly, 18 March 2004). Although the report is confidential and will not be released until it is finalised in September, some details have already been leaked. Specifically, the panel found that US$ 1.4 billion of the EU’s subsidised sugar exports are illegal, and that the EU exports up to four times more subsidised sugar each year than allowed under WTO agreements. Brazil’s Foreign Minister Celso Amorim expressed satisfaction with the interim ruling, describing it as "a Brazilian victory" — the second after another WTO panel ruled in favour Brazil’s complaint against US cotton subsidies earlier this year (see BRIDGES Trade BioRes, 25 June 2004). The EU would not officially comment on the interim report other than to acknowledge it had been released. The EU will have an opportunity to appeal the panel’s final decision once it is released.

Civil society groups welcomed this ruling. In a recent press statement, Oxfam — which has been leading a campaign to end EU sugar subsidies — applauded the ruling, stating it was a "triumph for developing countries and a death knoll for unfair EU sugar export subsidies". Trade experts have also commented on the decision, saying the ruling could hamper the bargaining position of EU trade negotiators in current agricultural trade negotiations by giving developing countries more leverage in opposing subsidies. The ruling will put further pressure on the EU to reform its sugar regime.

"WTO to Rule on Sugar Subsidies: Complaint Says Payments Provide Farmers in the EU With an Export Advantage," WSJ, 4 August, 2004; "WTO Report Jolts EU Sugar Producers," TERRA VIVA, 5 August 2004; "WTO Rules Against EU’s Policy of Subsidizing Sugar Exports," IHT, 4 August 2004.

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