EU: Exporters formally complain to WTO
Published: 03/10/2010, 8:50:28 AM
Australia, Thailand and Brazil say a European Union decision to let its sugar beet producers dump excess output on the world market could fuel bigger European exports of the sweetener, according to Reuters.
The Global Sugar Alliance told the European Commission in a letter it feared the commission's decision in late January to allow exports in excess of quotas would give EU beet producers incentives to boost output.
"The action may provide incentives for EU beet producers to increase production in the expectation of being able to export the resulting surpluses, and so undermine the changes made to the EU sugar regime since 2006," said the letter signed by Ian McMaster, chairman of the alliance.
Sugar futures fell almost 6% to a seven-month low on Tuesday as a bearish crop estimate for India increased losses that have wiped a third off prices since early February.
In late January the EU authorised the export of an additional 500,000 tonnes of out-of-quota sugar in the 2009/2010 marketing year.
It cited exceptional market conditions as sugar prices had soared to the highest level in nearly three decades because of a production shortfall in India, the world's largest consumer of the sweetener and second largest producer.
In its letter, the global alliance said the EU's move had significant market consequences, acting as a catalyst for a change in market sentiment and sending sugar prices into a tailspin.
"While the consequences for EU producers are small, as EU internal prices remain well above world market prices, the consequences for world market producers are very great," McMaster said.
He said the EU acted without consulting Australia, Brazil or Thailand and without providing information backing its assertion that world sugar prices exceeded the EU's costs of production.
"That the EU has procrastinated, delayed and not yet provided the information it promised in the WTO suggests the European Commission knows the additional exports are in breach of its WTO obligations," said McMaster.
He said Australia, Brazil and Thailand were gathering information to prove their case, adding that sugar exporters in each country were pushing their governments as strongly as possible to ensure that the EU abides by the umpire's rules.
"We hope a further WTO panel is not necessary, but fear the EC's actions will leave the governments of Australia, Brazil and Thailand with little choice," said McMaster.