THE WORLD Trade Organisation has confirmed that the EU sugar regime is illegal and must be changed within 15 months.

A case against the use of subsidies to promote EU exports had been brought by Thailand, Australia and Brazil.

Late last year the WTO came down in favour of these three countries and against the EU.
In particular it ruled that the EU was using high prices paid for A and B quota sugar to cross subsidise its exports of C sugar.

It also said that some 1.3m tonnes of sugar imported at full price from the African, Caribbean and Pacific countries could not be offset against the EU’s allowance for subsidised exports under the 1994 Uruguay Round.

The EU Commission appealed in January, but the WTO has today (Apr 28) confirmed its earlier decision.

It effectively means the EU will have to stop using subsidies on something close to 4m tonnes of sugar.

This is one of the main driving forces for reform of the EU sugar regime.

The commission is expected to issue formal reform proposals in June, based around significant cuts in price and quota for EU beet growers.

The latest WTO ruling has been welcomed by the plaintiffs and by Third world lobby groups.

“The EU will be required to significantly reduce its sugar exports and expenditure on export subsidies,” said Australian trade minister Mark Vaile.

“This will result in better conditions for Australia’s sugar industry, which depends on the world market for around 80% of its income.”

“The writing has been on the wall for ages, but the EU has been refusing to read it,” added Phil Bloomer, head of Oxfam’s Make Trade Fair Campaign.

“Today’s ruling confirms that they have been breaking WTO law and seriously harming developing countries in the process.

“They must act quickly to introduce reforms that end export dumping and increase market access for the world’s poorest countries.”

Tate & Lyle, the UK listed sugar group, saw its share price fall 15.5p to 453p on the news, despite saying the decision had no direct impact on its business.