New EU Sugar Regime

European Union's Agreement to Revamp the Sugar Subsidy Programme BBC, 11/28/05
Region Loses in EU Sugar Cuts BBC, 11/24/05

The European Union (EU) reached an agreement on November 24 in Brussels that cut the price of sugar by 36 percent over a four year period. Under the old EU system, sugar production was supported by generous EU subsidies and import tariffs, all of which will be phased out over a four-year period starting in 2006 .

The EU said this move would strengthen its position in upcoming World Trade talks in Hong Kong. Last month, the World Trade Organization ruled that EU sugar subsidies were illegal as they make it impossible for producers in other countries to compete. EU sugar prices are more than three times higher than the global market rate. Brussels also pays out export subsidies to get millions of tons of sugar a year off its market.

Critics say that the EU's reformed sugar regime looks out for sugar beet farmers in Europe more than sugar producers in developing nations. Guyanese President Bharrat Jagdeo said the agreement amounts to a "betrayal" and demonstrates that Europe cannot be trusted.
The EU has offered the 19 sugar producers in the African, Caribbean and Pacific (ACP) trade group $47million to help cushion the impact of reform, but the ACP dismissed this amount as "paltry".

Caribbean sugar producers say they could lose over $150 million annually under the new regime. Since then an EU agriculture spokesman said the bloc was proposing a further $223 million dollars in aid annually for Caribbean producers, but that deal depends on whether the EU governments can agree on a new budget deal.

Caricom (Caribbean community) leaders, who are now meeting in Malta at the Commonwealth Summit, said they will take their case to the WTO ministerial trade meeting in Hong Kong in December.