The European Union's top agriculture official is looking to radically overhaul the EU's sugar support system in response to charges that the subsidies distort world trade and hurt poor countries, his office said Thursday.
Franz Fischler, the EU's agriculture commissioner, will submit his proposals to other commissioners for a vote in mid-July, said spokesman Gregor Kreuzhuber.
"We are now preparing a reform which should make the European sugar system more competitive, more market-oriented, more trade-friendly and more environmentally friendly," Kreuzhuber said.
But final approval needs to come from the EU's 25 member states. And the cuts are likely to face stiff resistance from France, Germany and other sugar-producing powerhouses that have grown accustomed to the EU's generosity and would lose out under the reforms.
Kreuzhuber said the current system needed a revamp to combat "negative effects on international trade."
For years, critics have complained that EU's sugar subsidies allow EU farmers to undercut competitors, glutting world markets and depressing prices while shutting producers in many other countries out of the protected European market.
The EU regime is being challenged at the World Trade Organization by countries like Brazil, which recently won a decision at the WTO in a similar case against U.S. cotton subsidies.
Fischler's plan envisions lowering the EU's internal sugar price and reducing quotas as well as drastically cutting export subsidies, said an EU official, who spoke on condition of anonymity.
The official, who is familiar with the details of the plan, called Fischler's proposals a work in progress, noting that the final product could look considerably different.
Among the reforms being considered are cutting the guaranteed sugar price of [euro]632 (US$765) per ton by one-third between 2005 and 2007; and, reducing the amount of sugar EU farmers can produce - or the sugar quota - from the current level of 17.4 million tons to 14.6 tons a year, the official said.
If Fischler's proposals become reality, it would mean a major restructuring of the European sugar sector, including less sugar production and fewer factories. But it could also drive down the price of sugar in Europe, benefiting consumers and food producers.
In the case pending at the WTO, Australia, Brazil and Thailand say much foreign sugar is blocked by import tariffs of up to 140 percent, while subsidies encourage European farmers to overproduce. They excess, the charge, is dumped on world markets at very low prices.Associated Press:
