Conclusions and recommendations
1. Reform
of the EU sugar regime is inevitable and long overdue. The changes
implemented must be sufficient to allow the Community to honour
its existing and future international commitments. Reform of the
sugar regime should be consistent with that undergone by other
parts of the Common Agricultural Policy. (Paragraph 27)
2. We believe that,
if reform is going to address properly the challenges facing the
sugar sector, then it must take a significant step towards liberalisation.
However, it would not realistically be possible to move from such
a highly managed market to a fully liberalised position in a single
step. (Paragraph 32)
3. Therefore, our
preferred approach to reform is broadly consistent with the Commission's
second option. It envisages the following changes to the existing
arrangements:
the phasing out of the quota system;
a reduction in the internal market price; and
a lowering of the import tariff rate. (Paragraph
33)
4. To allow the European
Union sugar industry time to adapt to the proposed changes, we
believe it is desirable for the price reductions to be phased
in over time. Production quotas should only be lifted when a market
balance has been achieved, with levels of domestic production
and preferential imports matching demand within Europe. (Paragraph
36)
5. Reductions in the
import tariff rate will also be made possible, as institutional
prices for domestically produced and preferentially imported sugar
are lowered. This will afford the European Union some leeway in
WTO negotiations on the particularly contentious subject of market
access. (Paragraph 37)
6. It is our strong
recommendation that the United Kingdom adopt the position described
above in negotiating with other Members of the European Union
about reform of the sugar regime. (Paragraph 38)
7. In recognising
the potential losses to ACP countries resulting from reform, we
believe that transitional aid programmes should be set up to assist
their economies in diversifying away from dependency upon a European
Union commodity regime that has lost its legitimacy. (Paragraph
39)
8. We agree with the
Government that ways have to be found to ensure the cane refining
sector is not put at an unfair disadvantage during an interim
period when preferential suppliers are adapting to the reform.
(Paragraph 40)
9. We recognised that
some form of producer compensation will be required to help farmers
adjust to the new market conditions. To minimise market distortion,
these payments should be fully decoupled from production activity,
following the principles of the CAP reform agreed in 2003. (Paragraph
45)
10. Competition will
be increased more by abolishing quotas than through any other
policy change. However, if the new sugar regime does not contain
provision for eliminating production quotas, we recommend that
the competition authorities conduct an investigation into the
UK processing industry. (Paragraph 52)
11. Taking a lead
on sugar would mean that the European Union would no longer have
to be so defensive in trade talks, allowing it to argue its case
from a position of strength. (Paragraph 55)
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