1 / 25

European Communities – Export Subsidies on Sugar (WT/DS266)

European Communities – Export Subsidies on Sugar (WT/DS266). By: Charles Conner Giovanella de Weever Jacqueline Doll. Presentation Overview . Background on sugar policies and trade regimes Analysis of dispute settlement case EU sugar sector reforms Potential impact on world sugar markets.

keely-robles
Download Presentation

European Communities – Export Subsidies on Sugar (WT/DS266)

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. European Communities – Export Subsidies on Sugar (WT/DS266) By: Charles Conner Giovanella de Weever Jacqueline Doll

  2. Presentation Overview • Background on sugar policies and trade regimes • Analysis of dispute settlement case • EU sugar sector reforms • Potential impact on world sugar markets

  3. Involved Parties

  4. Timeline

  5. EC’s Common Agricultural Policy (CAP) • Why it started • Treaty of Rome • Improving the lives of farmers • Direct Subsidies • Impact on Imports • Quotas • Structure • Multifunctional • Multilateral

  6. Common Market Organization (CMO) • Established in 1968, the CMO is a system of price imports, quotas, and income arrangements to support European sugar farmers • A and B Sugar: two categories of sugar reaching certain quantities that are guaranteed a minimum price • C Sugar: any sugar produced in excess of category A and B quantities. This sugar must be exported within a certain time frame, or a charge will be levied. • Quotas are allocated to the member states, who in turn allocate quotas to each processor on the basis of its production in a reference period

  7. ACP Sugar Protocol • Intergovernmental agreement • Fixed quantities (raw/sugar cane) • Indefinite period of time • How much they’re guaranteed to import • 1.6 million tons of sugar • Biggest ACP sugar producers • Swaziland • Mauritius • The EU exports an equivalent amount to imports from ACP countries.

  8. European Sugar Market(Sugar Regime) • Consumption • 17.6 million tons • 12% of world market consumption • Production • Third largest producer • Roughly 20 million tons per year • 14% of world market share • Price of sugar • Remains high in the EU • Beet production is costly • Net Exporter

  9. Complainants Sugar Sectors • Brazil • Production: 35.8 million tons • Consumption: 9.45 million tons • Exports: 23.85 million tons • Thailand • Production: 7.7 million tons • Consumption: 2 million tons • Exports: 5 to 6 million tons • Australia • Production: 4.9 million tons • Consumption: 1 million tons • Exports: 4.1 million tons

  10. Brazil’s Complaint • “The EC under Council Regulation No. 1260/2001, export subsidies for sugar and sugar containing products above its reduction commitment levels specified in Section II of Part IV of its schedule of Concessions” Inconsistent with: • Article III: 4 and XVI of the GATT 1994 • Articles 3.3, 8, 9.1(a) and (c), and 10.1 of the Agreement on Agriculture • Articles 3.1 (a) and 3.2 of the SCM Agreement.

  11. Consultations • September 27, 2002 – Request for consultations by Brazil and Australia concerning the European Communities’ support for its sugar, allegedly in excess of its commitment schedule under Annex 2 of the Agreement on Agriculture • March 14, 2003 – Thailand requests consultations with the EC on the same issue • July 11, 2003 – Unable to reach a negotiated agreement with the EC, Brazil requests the establishment of a panel at the next DSB meeting

  12. Complainants Argument/Position • The European Communities had exceeded their commitments on amber box subsidies under its reduction commitments schedule • Price supports of A and B quota sugar effectively cross-subsidize C quota sugar. C sugar must be exported or carried over to fulfill the next year’s quotas • ACP countries are guaranteed exports of 1.6 million tons annually into the EC, and an equivalent amount must be exported.

  13. Terms of Reference • EC: Complainants’ claims under the Agreement on Agriculture are outside of the Panel’s terms of reference • Violations of Article 3.3 and 8 are export subsidies, not “exports of sugar” • Identification of violations were not specific enough • Complainants merely referenced “sugar regime” or Council Regulation No. 1260/2001, which is 45 pages long • Sugar exports are private transactions, not government measures within meaning of DSU 6.2 • Complainants: Article 10.3 of AA reverses burden of proof. EC had to prove no export subsidies had occurred on exports in excess of its commitments • Panel: Complainants were sufficiently specific and demonstrated that exports had occurred in excess of the EC’s Schedule, shifting burden of proof onto the EC. Therefore Complainants’ argument is within Panel’s terms of reference.

  14. ACP/India Sugar • EC: Exports of ACP/India sugar do not count towards its reduction commitments because of “Footnote 1” in its Schedule • Footnote 1: “Does not include exports of sugar of ACP and Indian origin on which the Community is not making any reduction commitments. The average export in the period 1986-1990 amounted to 1,6 mio t.” • EC referred exclusively to Footnote 1 in relation to ACP/India sugar exports • Panel: All export subsidies scheduled pursuant to Article 3 & 8 had to be subject to reduction commitments. Footnote 1 was not, therefore it was invalid. • The EC itself apparently did not consider Footnote 1 as a commitment because it had not notified the WTO of its export subsidies with respect to ACP/India Sugar.

  15. C Quota Sugar • Complainants: EC has created legal framework that encourages overproduction of sugar, segregates the export market for C sugar from the domestic market by imposing sanctions on exports, and generates profits and capital used to fund exports below the cost of production for C sugar. This framework is in effect a payment under Article 9.1(c) of the Agriculture Agreement. • EC: C sugar exporters only get payment from world markets. Those prices should be relevant benchmarks. • Panel: A Quota Sugar purchased at 46.72 Euros/ton; B Quota Sugar purchased at 32.42 Euros/ton. About 350 percent and 250 percent of world market prices respectively. • Growers of A and B beet also grow C beet. There are no independent C sugar beet producers, therefore the minimum prices paid to A and B producers cross-subsidizes C producers.

  16. C Quota Sugar, cont’d • Inconsistent with Article 9.1(c) – payments made on the export of an agricultural product that are financed by virtue of government action. • Canada-Dairy Appellate Body: Provision of an agricultural input below its total costs of production constitutes a “payment” to the processor of that input. • A payment may be granted in a form other than money payment, including revenue foregone.

  17. C Quota Sugar, cont’d • Panel: Below costs C beet sales to C sugar producers, cross-subsidization from profits made on sale of A and B sugar, and exports of sugar below total costs of production constitute export payments. • Because C beet must be processed into C sugar which must be exported, payments are made “on the export.” • EC sugar regime arrangement results in C sugar producers receiving payments on the export “financed by virtue of government action.” • Exports of C quota sugar are subsidized by the EC government in excess of its reduction schedule, and are therefore inconsistent with the EC’s obligations under Articles 3 and 8 of the Agreement on Agriculture

  18. Panel Conclusions • Panel found that the EC’s total exports of sugar exceeded its quantity commitment level, inconsistent with Articles 3.3 and 8 of the Agreement on Agriculture • Since 1995, the EC provided export subsidies within the meaning of Article 9.1 (a) of the Agreement on Agriculture to exports of “ACP/India equivalent sugar” • Also since 1995, the EC provided export subsidies within the meaning of Article 9.1 (c) of the Agreement on Agriculture to its exports of C sugar • The EC did not demonstrate that its sugar exports in excess of its commitment levels were not subsidized, and was therefore acting inconsistently with the Agreement on Agriculture

  19. Panel Recommendations • Bring EC Council Regulation No. 1260/2001 into conformity with its export subsidies obligation under Articles 3.3 and 8 of the Agreement on Agriculture • EC should bring its production of sugar more into line with domestic consumption while respecting its international commitments with respect to imports • The Panel recognizes the EC’s statement on its commitment to ACP countries and India. Reform of its sugar regime can continue import preferences.

  20. Appellate Body Findings • Upheld panel findings that the EC was in violation of its commitments with regard to C Sugar and and preferential treatment of ACP imports • Disagreed that footnote 1 had no legal effect, but agreed that it did not have the effect of enlarging the EC’s quantity commitment levels • Disagreed with the panel’s decision to not consider complainants’ claims regarding the SCM agreement

  21. Implementation • May 19, 2005- The DSB adopted the Appellate Body Report and also the Panel Report, which had been modified. • In recent 2010 discussions, the EC recently decided to export an additional “half a million tons” of a particular category of sugar, also known as “out of quota” sugar. The total will now be two million tons, and Australia, Brazil and Thailand objected to this decision. • Australia, Brazil, and Thailand repeated their statement recently made in the DSB in reference to WTO cases DS265, DS266, and DS283 Souce: http://www.wto.org/english/news_e/news10_e/ag_com_10mar10_e.htm

  22. EC’s Solution • EC’s sugar reforms • EU lost DS266, and the sugar regime was set to expire on June 30, 2006 • The objectives of the reform included: 1. regular supply of sugar 2. making the sugar sector more competitive 3. market orientation 3. fair standard of living for farmers 4. maintain preferential access for ACP and LDC producers 5. Limit budget costs 6. Simplify regime and make transparent • The reforms resulted in a significant price reduction and direct payments to farmers increased

  23. Broader Implications and Issues • Impact on world sugar market • Impetus for the DOHA round, along with Brazil’s US Cotton WTO Case DS 267 • Bilateral interest • National and International Interests Involved • The affects on US trade producers and ACP countries • Diversification of Crops

  24. Sources • ACP/EU Sugar Protocol. African, Caribbean and Pacific Sugar Group. 2005. http://www.acpsugar.org/Sugar%20Protocol.html • Common Agricultural Policy. Wikipedia. http://en.wikipedia.org/wiki/Common_Agricultural_Policy • EU sugar sector: Facts and Figures. 2004. http://www.deltha.ec.europa.eu/bic/news/newsfile/sugar_figures.pdf • Sugar and the European Union: Implication of WTO Findings, and Reform. USDA-Foreign Agricultural Service. 2004.http://www.fas.usda.gov/htp/sugar/2004/internet%20article%20on%20wto%20and%20reform%20rev1.pdf • Sugar: World Production Supply and Distribution. USDA-Foreign Agricultural Service. September 2009. http://www.fas.usda.gov/htp/sugar/2009/Nov_sugar_2009.pdf • The Sugar Industry. Australian Government-Department of Agriculture, Fisheries and Forestry. 13 Feb. 2008. http://www.daff.gov.au/agriculture-food/wheat-sugar-crops/sugar/industry • The Common Agricultural Policy: A Brief Introduction. Institute for Agriculture and Trade Policy. September 2007. http://www.iatp.org/iatp/publications.cfm?refid=100145 • The Common Agricultural Policy Explained. European Commission: Agricultural and Rural Development. http://ec.europa.eu/agriculture/publi/capexplained/cap_en.pdf • The Common Organization of the Market in Sugar. European Commission: Agriculture Directorate-General. September 2004. http://ec.europa.eu/agriculture/markets/sugar/reports/descri_en.pdf • The European Sugar Sector: A long-term competitive future. European Commission. September 2006. http://ec.europa.eu/agriculture/capreform/sugar/infopack_en.pdf

More Related