EU Promises Brazil It Will End Sugar Subsidies in May

In a note issued on Friday, October 28, the Brazilian Ministry of Foreign Relations declares that it considers "reasonable" the deadline set by the World Trade Organization (WTO) for the European Union (EU) to comply with the decision to eliminate sugar export subsidies.

According to the WTO’s determination, the EU has until May 22, 2006, to implement the WTO’s recommendations.

The WTO released a report in May, recommending that the EU limit its annual sugar exports to 1.2 million tons and its annual sugar export subsidies to €499.1 million. According to the ministry, this should enlarge the international sugar market, annually, by about 5 million tons.

Considering the current price of sugar, US$ 296.5 per ton, Brazil and the other competitive producer countries would gain access to a potential market worth US$ 1.48 billion, annually.

"The Brazilian government hopes that the European Union will obey the determinations of the Dispute Settlement Body within the period that was established and reiterates that full observance of existing trade rules is essential for the credibility of the negotiations over new multilateral rules in the context of the Doha Round," the note says.

Following the announcement of the decision, the president of the São Paulo Sugar Cane Agroindustry Union (Unica), Eduardo Pereira de Carvalho, affirmed that the EU has already assured Brazilian producers that it will adhere to the decisions and dates imposed by the WTO.

"We have a formal declaration from the European Commission that the WTO decision will be obeyed. And they said this in a clear manner, formally and informally. So, I can only believe that it is true," he remarked.

According to Carvalho, Brazil’s annual losses due to European sugar export subsidies amount to nearly US$ 500 million.

Agência Brasil

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