The European Union (EU) will have to reduce its subsidies to sugar exporters. This was the decision of the Appellate Body of the World Trade Organization (WTO), which ruled in favor of an appeal filed by the Brazilian government.
No further appeals are permitted. The decision was announced by the general coordinator of Litigation in the Brazilian Ministry of Foreign Relations, Minister Roberto Carvalho de Azevedo.
According to Azevedo, Brazil was pleased with the result. “It is of utmost importance, because the market itself has already begun to react in line with expectations that there will be changes in terms of a greater opening of the international sugar market.”
The Brazilian government has been discussing the reduction of EU subsidies in the WTO for more than two years. An agricultural agreement limited subsidized exports of European sugar to 1,273,500 tons, the equivalent of € 499.1 million per year.
Brazil argued in the Appellate Body that there were years when the EU subsized over 5 million tons of sugar, exceeding the limit stipulated in the agreement.
“These commitments have been in effect since January 1, 1995. Brazil is asking for nothing more than compliance with what had already been agreed to,” Azevedo affirmed.
The decision to lower EU sugar export subsidies is expected to open a market worth US$ 1.2 billion annually to competitive producers on the international market.
Of this total, Brazil expects to capture up to US$ 700 million. According to data from the Ministry, Brazil exported 13.4 million tons of sugar in 2003.