Select Committee on Environment, Food and Rural Affairs Written Evidence

Memorandum submitted by the World Trade Organisation (O81)

  As you are aware, Australia, Brazil and Thailand have undertaken a dispute settlement proceeding against the European Communities (EC) (WT/DS265, WT/DS266 and WT/DS283 which are publicly available on the WTO website). Based on standard WTO procedures, the Panel is requested to respond to the claims raised by the complainants in their Panel requests. In their Panel requests, the complainants claim that the EC sugar regime is inconsistent with the EC's agriculture commitments under the WTO. In particular, the complainants' claims are concerned with the following two aspects of the EC sugar regime:


    The EC sugar regime guarantees a high price for the sugar that is produced within production quotas. This is termed "A and B sugar". Sugar produced in excess of these quotas is termed "C sugar". Sugar classified as C sugar cannot be sold internally in the year in which it is produced, and must, in principle, be exported. Payments in the form of high prices provided to growers and processors by the EC sugar regime finance the production and export of C sugar at prices below its total cost of production.


    The EC grants export subsidies to an amount of white sugar ostensibly equivalent to the quantity of raw sugar that the EC imports under its preferential arrangements. This amount, reportedly, is approximately 1.6 million tons.

  According to the complainants, the EC unjustifiably excludes these subsidies from the calculation of its total amount of export subsidies that it provides for sugar. According to the complainants, the amount of sugar thus subsidised, alone or in combination with other export subsidies for sugar provided by the EC, exceeds the export subsidy reduction commitment levels of the EC and, as such, constitutes a violation of the EC's obligations under Articles 3.3, 8, 9.1(a) and (c), or, alternatively, Article 10.1 of the Agreement on Agriculture. By granting export subsidies within the meaning of Articles l.1(a)(1)(i) and (iv), 1.1(a)(2), and 1.1(b) of the SCM Agreement which, according to the complainants, are not permitted by the Agreement on Agriculture, the EC also acts inconsistently with its obligations under Articles 3.1(a) and 3.2 of the SCM Agreement that prohibit export subsidies.

  Assuming a regular time-table, the Panel would be expected to issue its Final Report to the parties by September 2004. This Panel report would then be translated (normally within a month) and circulated to all WTO Members. Panel reports can be appealed to the Appellate Body within 60 days of their circulation to all Members. The Appellate Body is expected to issue its final decision within 90 days from the date of an appeal.

20 April 2004

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