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European Union

EU Sugar Subsidy Reform Faces Bitter Struggle Ahead

Strategic Insights

— 1 min read

A German plea for gradual reform of the European Union's sugar subsidies system has put the spotlight on the divisive issue, which is set to pit heavyweight EU states against smaller, more vulnerable producers. The proposed reform, backed by Brussels, aims to cut subsidies and eliminate the current regime by 2008. However, 10 EU member states are opposing the change, citing concerns that it will lead to a painful collapse of their sugar industries.

Key Takeaways:

  • Germany's agriculture minister, Renate Kunast, has called for "steps" giving producers more time to adjust to the loss of subsidies, which runs contrary to the views of EU's agriculture commissioner, Mariann Fischer Boel.
  • The EU's agriculture commissioner plans to unveil a draft law on June 22, which will involve steeper cuts than originally envisaged and scrap the idea of a further revision of the regime around 2008.
  • The planned reform is expected to divide EU farm ministers, with Dominique Bussereau, French agriculture minister, saying that the WTO ruling "should push us to go faster" and reform the system by November, while Mary Coughlan, the Irish farm minister, described the current plan as "completely unworkable".
  • The 10 opposing countries, including smaller producers at the EU's periphery, have voiced their concerns in a joint letter at the end of last year.
  • The pro-reform camp, including the European Commission, insist that the WTO ruling makes reform unavoidable, and the EU must show willingness to reform the sugar sector to continue spearheading the Doha round of world trade talks.

Statistics:

  • 10 EU member states are opposing the change to the sugar subsidies system.
  • The EU's agriculture commissioner plans to unveil a draft law on June 22, which will involve steeper cuts than originally envisaged.
  • Emphasis is being placed on creating "long-term certainty" for the sugar sector, with EU farm ministers meeting for the first time since the WTO upheld a complaint from Brazil, Australia, and Thailand against the EU sugar subsidy rules.

Sources:

  • World Trade Organisation
  • Financial Times (Fischer Boel's quotes)
  • Reuters (Bussereau's quotes)
  • Irish Times (Coughlan's quotes)
  • Joint letter from 10 EU member states opposing the sugar subsidy reform (no date, not available in the original text)

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