Sugar Producers Press for Free Trade; EU Warns US on Wheat Gluten

23 May 2000

The Global Alliance for Sugar Trade Reform and Liberalisation, a grouping of 13 sugar producing countries, met in Honduras earlier this month to discuss strategies for liberalising sugar trade as part of WTO talks on agriculture. The alliance comprises Australia, Brazil, Canada, Chile, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, India, Nicaragua, Panama and Thailand. Brazil and Australia are the world's largest sugar exporters.

The Alliance will bring recommendations on negotiating positions to the next round of talks of the 15-member Cairns Group of agricultural exporting countries - to which Australia, Brazil, Canada, Chile, Colombia, and Thailand also belong. "Our strength stems from the commitment of members to ensuring positive progressive and meaningful reform of trade distorting policies", said Fernando Fiallos, general manager of Honduran Sugar Producers.

Developing country Alliance members note that their economies suffer most from trade distorting sugar policies in the EU and US. The Alliance noted that sugar producers in the EU and US receive significantly higher prices per pound for sugar because of government subsidisation and quota programs. The alliance noted that EU farmers receive US$0.28 cents per pound of sugar, and US farmers receive US$0.17 per pound, compared to US$0.06 per pound received on the world market by Brazilian and other sellers. Subsidised sugar production in the EU and the US -- for instance in the Florida everglades -- has also been targeted by environmentalists as encroaching on ecologically sensitive areas that would not otherwise be tilled.

Argentina and the Netherlands on 15 May signed a joint co-operation agreement for the production and marketing of agricultural goods. The joint co-operation agreement aims to improve the Netherlands' trade relations between and Argentina and its Mercosur trade partners (Brazil, Uruguay and Paraguay). The Netherlands minister of foreign affairs Gerrit Ybema said in a statement that the Netherlands would work to find ways to reduce agricultural subsidies "so that in the future we can eliminate them altogether."

EU Agriculture Commissioner Franz Fischler on 15 May criticised a US decision to cut the annual import quota on EU wheat gluten as of 1 June. Mr. Fischler said the US decision would further aggravate already strained EU-US trade relations. At the same time, a WTO Dispute Settlement panel investigating an EU complaint against US restrictions on imports of EU wheat gluten products could be delayed after the panel chairman resigned citing a possible conflict of interest. The WTO established the Panel in June 1999 to decide whether US restrictions on EU wheat gluten violate the WTO Safeguards Agreement. The Panel's original chair, a Polish diplomat, resigned citing a conflict of interest due to Poland's application to join the EU. A Panel decision was expected by mid-June.

In other news, India is reportedly exploring the possibility of bartering wheat for commodities it would otherwise import. Bartering wheat for other products such as cotton is preferable to selling its wheat stocks for cash on the world market, where the crops would incur heavy losses. Instead, India may seek a trade for cotton with neighbouring Pakistan. However, it is unclear how India would resolve trade restrictions it imposed earlier this year on Pakistani cotton citing phytosanitary considerations (see BRIDGES Weekly Trade News Digest Vol. 4, No. 3, 25 January 2000,http://ictsd.iisd.org/html/weekly/story3.25-01-00.htm ).

"Global sugar alliance to increase push for trade liberalisation," BLOOMBERG NEWS, 9 May 2000; "Argentina, Netherlands sign agriculture trade accord," DOW JONES NEWSWIRE, 15 May 2000; "Chairman's resignation to delay WTO panel on wheat gluten," INSIDE US TRADE, 28 April 2000; "EU ag min Fischler slams new US wheat gluten quota," DOW JONES NEWSWIRE, 15 May 2000; "India seeks wheat barter agreement with Pakistan," FINANCIAL TIMES, 17 May 2000.

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