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November 28, 2013 - International Trade News

Global Sugar Alliance - WTO Ministerial Opportunity to Reinvigorate WTO Trade Reform

The Bali Ministerial meeting provides an opportunity to reinvigorate world trade talks, overcome the negotiating impasse and finally rid world agricultural trade of all export subsidies as was agreed in Hong Kong in 2005.

In 2005 the WTO ruled that all EU sugar exports are subsidised.  The European Commission’s recently announced policy changes are an attempt to circumvent its obligation to limit sugar exports to 1.27 million tonnes.  They do not remove the level of production and export support provided to EU sugar producers.  The European Commission must comply with its WTO obligations, after the changes are implemented.  

The US re-export and exchange program is a new policy artifice designed to enable the USDA to clear surplus sugar from the US market in support of high internal US prices. 

The market problems caused by the surplus sugar generated by both US and EU sugar policies should be internalised, borne by the US and EU industries or government, not exported to the detriment of world market prices or the world’s most efficient producers. 

The world’s richest economies each administer sugar policies that encourage internal production in the name of supply security.  US and EU sugar policies create significant domestic surpluses, which both are looking to export.  The threat of additional volumes of subsidised sugar flooding onto the world market, distorting trade flows and lowering prices that the world’s most efficient producers receive is increasing.

The challenge for the WTO is to stem the rising tide of protectionism in world markets.  This will require leadership.  As the world’s richest economies the US and EU must step up.

The EU must do more than open its markets to countries that are either unable to supply or able to find more remunerative markets closer to home, while heavily subsidising its own sugar producers.  The EU must demonstrate to the world that it accepts its international obligations and will ensure it adheres to these obligations for the long term.  The ongoing efforts of the Australia, Brazil and Thai governments to ensure EU compliance with its international obligations are strongly supported.

US taxpayers are paying a heavy price for the surplus sugar their program is generating.  The inconsistencies in US trade policy are clear, restricting access to its sugar market is unlikely to convince others of the need to open their markets to US’s wider export portfolio – agricultural and industrial goods and services.

Although concerned about food security, the Japanese government maintains policies that frustrate the introduction of modern production techniques and increased agricultural productivity.

The WTO must develop modern trade rules that enable the development of global supply chains.  Opening markets will deliver food security; ensuring consumers around the world have access to competitively priced food.

The appointment of Mr Roberto Azevêdo as the WTO’s sixth Director-General at this critical juncture is welcome.  A fresh approach will provide the renewed enthusiasm and generate the action required to open markets and lift incomes.

It is important that the WTO delivers on world leaders’ promises of opening markets as a means of strengthening global economic growth and development.  Open markets will improve trade performance, lift incomes domestically and globally and improve food security.  Resources, labour and capital will be employed in more profitable pursuits and consumers will have access to lower cost, more efficient and more reliable supply chains.

The WTO must not be usurped by the plethora of bilateral and regional trade agreements being negotiated around the world.  The WTO is the most important mechanism through which the elimination of trade distorting policies can be achieved and export subsidies eliminated.

Efforts to reinvigorate the WTO Doha negotiations are timely.  The integrity of the WTO is at stake.  A fairer, more market-oriented international trading system through the Doha negotiations is achievable.  Success will lift income and standards of living for all.

A useful down payment will be the elimination of export subsidies, as agreed.

Global Sugar Alliance members offer their full support to Mr José Orive’s candidacy for appointment as the incoming Executive Director of the International Sugar Organization.

The Global Alliance for Sugar Trade Reform and Liberalization brings together 85% of the world cane sugar exports.  The Global Sugar Alliance members (Australia, Brazil, Canada, Chile, Colombia, India, Guatemala, South Africa and Thailand) are active advocates to improve the world sugar trading environment.  Members work closely together to ensure the fair and equal treatment of sugar and ethanol in the WTO negotiations on agriculture so that markets are allowed to work. We are working with our governments to remove restrictions that prevent consumers and sugar users, wherever they are located from accessing the most competitively produced sugar and ethanol in the world.