If ever there was a contender for Private Eye's "Muckspreader" column, this has to be it!
It has emerged that the EU is facing a massive increase in sugar production this season, as warm wet conditions have led to a bumper crop. Producer body CIBE reckons the EU as a whole will have a sugar surplus of around 2.4m tonnes.
This is way in excess of the 1.37m tonnes it is allowed to export under the terms of a WTO ruling reached in 2004.
That was based on a complaint by Australia, Brazil and Thailand which had argued that the EU was "dumping" its surpluses on the world market.
But that was in the days when world prices were way below EU levels. The situation is very different today, with the global shortage of sugar leading to a doubling in prices in just 12 months.
The response suggested by CIBE is for the EU to increase the export ceiling for 2010, so that, instead of having to stockpile about 1m tonnes of surplus sugar, processors can sell it to the world market and help relieve the global shortage...
What could be more sensible? Global prices would come down a bit, the EU sugar industry would earn a bit and consumers the world over would save a bit.
But that's not the way Brussels sees it. It maintains that "it is not possible to export out-of-quota sugar in excess of the WTO limit" and suggests the only option is to carry over any surplus into next season.
OK, clearly the EU Commission cannot move unilaterally on this. To do so would risk incurring the wrath of the WTO and might have certain "consequences".
But there is nothing to stop it from at least tabling a request with the WTO to raise the export ceiling. The chances are the WTO would view the request favourably. It certainly seems unlikely that the likes of Australia, Brazil and Thailand would complain, since their consumers are feeling the impact of high sugar prices too.
The more likely outcome, however, is that the EU will do nothing. As a result, each member state will have to put its extra sugar into storage this winter, with all the cost that involves, and carry it forward to next season.
And that will mean further reductions in EU growers' 2010/11 contract tonnages - even though prices are sky high and the world is crying out for sugar. Bonkers!
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Well, while you make a good case for the EU to at least try to lobby the WTO, I think you're being far too simplistic with your arguments.
The EU were (rightly) banned from dumping sugar into the world market after being called out by countries like Australia, Brazil and Thailand, and while they may be "crying out for sugar", something tells me they wont be entirely happy with the EU coming out as their saviour.
There are principals and politics at work here, the countries mentioned above aren't going to suddenly accept EU sugar just because it is cheaper, and the WTO will not revoke the trade ban just because it suits them because it would set a bad precedent.
A ban is a ban, it is a punishment for breaking conventions, laws, or in this case, free trade rules, you cannot just pick and choose when to enforce it, or when to abide by it when it suits you.
The moral of the story is quite clear, if you want proper free trade, stick by the rules.
Hey Phil, an even better idea for the EU commission would be to open European markets to Australian, Brazilian, and Thailand exporters when they too have surpluses. That way they could reciprocate by lowering the cost of sugar for EU consumers. In the roller coaster ride of world commodity markets it is a pretty dismal sideshow if you never get to see the view from the top.