Brussels to appeal against WTO ruling over sugar exports

The European Union yesterday said it would appeal against a finding that as much as half of its sugar exports violated global trade rules.

The European Union yesterday said it would appeal against a finding that as much as half of its sugar exports violated global trade rules.

The World Trade Organisation upheld a complaint against EU export subsidies by Brazil, Australia and Thailand, who accused Brussels of paying illegal production subsidies.

The ruling said that about half of the bloc's annual exports of 5 million tonnes of sugar were subsidised in violation of EU trade commitments.

The three-person panel called on the EU to bring its sugar programmes "into conformity with its obligations in respect of export subsidies".

But Franz Fischler, the EU Agriculture Commissioner, said that the WTO ruling would not stop the overhaul of its sugar regime that it has embarked on.

Mr Fischler said: "We are dissatisfied with this ruling and will appeal against it. But the appeal will not prevent the EU from ploughing on with a radical overhaul of its sugar regime. This reform is necessary for internal reasons. It will make the EU sugar sector more competitive and trade-friendly."

The appeal is likely be decided within the next three months. The EU will then be given a deadline to comply with the ruling, pay compensation to the complainants or face the threat of sanctions.

In July Brussels said that it planned to overhaul its £3.7bn sugar industry, slashing price guarantees by one-third and cutting output quotas by 16 per cent. That would end high-cost sugar production in member countries such as Ireland, Finland, Greece, Spain and Portugal, according to a study by the Commission.

A lobby group representing European chocolate, biscuit and confectionery markets, which make up the largest sugar consumers, said the EU must stop "dumping" sugar on world markets. Caobisco said that anything short of full implementation of the ruling would weaken the multilateral trading system and undermine negotiations towards a new trade deal.

Oxfam estimates that last year £520m of subsidies went to six sugar giants including Tate & Lyle of Britain, Germany's Sudzucker and France's Beghin Say.

A spokesman for Tate & Lyle said: "We are a bridge into Europe for some 300,000 sugar cane farmers in Africa and the Caribbean and we will work to make sure we continue to be that bridge."