EU governments give frosty reception to sugar plan
By Jeremy Smith
Guyana Chronicle
July 20, 2004
BRUSSELS, (Reuters) - Several EU nations blasted plans for overhauling the bloc's 35-year-old sugar regime yesterday, saying proposals including stiff price cuts would cause massive job losses and the collapse of national sugar industries.
The plans, authored by EU Farm Commissioner Franz Fischler, recommend slashing internal prices by some 40 per cent, scrapping the safety-net intervention system and reducing EU output to shake up a policy widely criticised as distorting world trade.
EU farm ministers, meeting in Brussels, gave Fischler their first reaction to his plan, which envisages reform starting in July 2005 - one year before current policy is set to expire.
"There was a negative approach from the majority of delegations," one EU official said. "But nobody could really say they were against a reform: they know they can't avoid it."
As expected, the plan got a frosty reception from countries where Fischler's idea of slicing into support prices and production quotas threatens to lead to thousands of job losses as less competitive sugar operations are forced to close.
Speaking at a ministers' meeting in Brussels, Ireland's Farm Minister Joe Walsh rejected the scale of the planned cuts and said the proposals were unacceptable in their current form.
"I can state emphatically, even at this early stage, that these (proposals) are unacceptable to Ireland. The effect of the proposed price reductions, even allowing for compensation, would be to make sugar beet growing and sugar manufacture no longer viable in Ireland," he said.
"I see no reason to rush into reform of any kind at this stage," he said. "I accept that a reform of the sugar regime is necessary and unavoidable...but I believe that we are moving too far and too quickly."
This view was echoed by several smaller sugar producers such as Finland, which fear that their beet processing industries would simply collapse - especially given that the plan also calls for production quotas to be transferable between countries.
NO HURRY, SAYS FRANCE
France, the EU's largest sugar producer, said to start a reform in 2005 was way too early and said it was essential for the EU to keep enough tariff protection on sugar imports.
"We know that we need a sugar reform, but it's a very complicated reform and we will do it without a rush," French Farm Minister Herve Gaymard told a news conference.
"We still haven't got the result of the WTO panel," he said, referring to the trade suit last year filed against the EU by Australia, Brazil and Thailand at the World Trade Organisation.
The three countries, all major sugar producers, say EU subsidies are driving world sugar prices below production costs. An initial WTO verdict is expected in September and could affect both the content of the reform proposal and its timing.
The EU's sugar reform plan comes after other reforms of the bloc's 43 billion euro ($52 billion) farm support programmes, as it has come under pressure in world trade talks. EU sugar policy has barely altered since its launch in 1968.
Sugar subsidies cost the EU around 1.7 billion euros a year, but critics say the true cost of the system is much higher due to the inflated prices charged to consumers based on minimum prices that are more than three times world market levels.
LIMITED BACKING
Fischler's plan did receive some backing from pro-reform countries such as Britain, Denmark and Sweden. The Netherlands broadly welcomed the plan but said the scale of the planned price and quota cuts made the 2005 time frame unrealistic.
Spain, which has previously called for the current regime to be preserved, said it wanted to see a serious impact study on the potential impact of the proposals.
Germany welcomed the philosophy of the proposals but agreed that it would like to see what kind of impact they might have.
"It is not yet clear what all the consequences would be and so we must find out what it means for farmers and developing countries," said German Minister Renate Kuenast.