18th REPORT: TOO MUCH OR TOO LITTLE? CHANGES
TO THE EU SUGAR REGIME
Department for Environment, Food and Rural
Affairs Response
INTRODUCTION
The Government welcomes this considered and
constructive examination of the issues relating to reform of the
EU sugar regime.
As the Committee's report notes, agreement on
a revised regime was reached at the November 2005 Agriculture
Council on the basis of a Presidency compromise which was supported
by an overwhelming majority of member states. The formal legislative
aspects of the dossier are expected to be completed in February
2006, now that the European Parliament's Opinion has been received.
Secondary legislation implementing various aspects of the new
regime remains to be put in place by the Commission through the
Management Committee procedure, before entry into force of new
arrangements from 1 July 2006. In addition Member States need
to reach their own decisions on certain discretionary elements,
notably in respect of compensation for growers and the operation
of the voluntary restructuring scheme.
Decisions are also still outstanding on adjustment
aid for ACP Sugar Protocol countries for the period 2007-13, following
agreement on an initial tranche of 40 million euros for the balance
of 2006. Adjustment aid was not a matter for the Agriculture Council
and negotiations continue on this aspect of sugar reform in the
General Affairs and Development Councils. It is very much the
Government's intention that this should be concluded as soon as
possible.
Notwithstanding the work still to be done on
this and on transitional and implementing measures in general,
the overall framework and duration of the new regime is nevertheless
now clear. Much of this reflects the Committee's conclusions.
The Government believes the agreement on reform to be a very good
outcome, which marks a major step change in a regime hardly touched
by all previous CAP reforms since its inception nearly 40 years
ago.
When fully implemented, the reformed regime
should bring significant economic benefits to the EU and greatly
reduce the market and trade distortions that have characterised
the present arrangements. The new regime should also enable the
EU to comply in full with its WTO and other international obligations
and to advance its more general trade and development objectives.
The final package endorsed by the Council is
very closely based on the proposals considered by the Committee
in its report, namely a substantial cut in institutional-prices,
abolition of permanent intervention, the introduction of a voluntary
restructuring scheme to reduce production and a new decoupled
direct aid for growers. Although certain changes have been made,
the Government believes these are entirely consistent with the
aims of the reform and in some instances help to address specific
concerns raised by the Committee, notably in respect of possible
discrimination against the UK as a result of the current deficit
area status of UK beet production and the balance between the
beet and cane sectors. A final Regulatory Impact Assessment incorporating
these elements is in preparation, but is expected to confirm the
broad efficiency and welfare gains resulting from the earlier
analysis.
The main points of difference between the final
compromise and the original proposals can be summarised as follows:
— the price cut will now be 36% instead
of 39%, the initial reduction in 2006-07 being the same as proposed,
but with new interim steps in 2007-08 and 2008-09 leading to the
final cut in 2009-10;
— the budgetary provision for the decoupled
grower compensation will remain as before, but, in Member States
such as the UK where the level of existing prices has reflected
their deficit status, additional compensation will be provided
in the first four years of the reform;
— as a consequence of the re-phasing
of the price cuts, ACP and LDC suppliers will have longer to adjust,
and more money will be raised through the processor levy (thereby
allowing the rate of restructuring aid to be maintained at €730
per tonne, in 2007-08);
— a minimum of 10% of the restructuring
aid is now reserved for sugar beet growers and machinery contractors
to compensate them for the loss of their specialised machinery
when production is abandoned, and the fund will now provide greater
flexibility as regards the partial closure or re-use of buildings:
also, Member States in which more than 50% of the quota is being
given up can qualify for an additional diversification aid reflecting
the extent to which their industry is closing, as well as some
time-limited adjustment aid for remaining growers;
— there will be a limited safety net
intervention scheme for four years, with a ceiling of 600,000
tonnes a year, set at 80% of the reference level for the following
year;
— traditional cane refiners will receive
a new transitional aid, totalling €150 million in the period
to 2009-10, to adjust to new market conditions;
— 10 Member States not included in
the earlier allocation key for C sugar will receive additional
quota, and three will receive additional isoglucose quota;
— there will be a 50% reduction in
the levy contribution payable by the isoglucose sector;
— new assurances have been given about
the availability of sugar at competitive prices for non-food uses,
and on the possibility of exports within the revised limits set
by the WTO;
— the circumstances in which the existing
safeguard provisions under the Everything But Arms Agreement might
be invoked where fraud is suspected have been clarified.
In the light of these developments the Government
has the following responses to the Committee's conclusions.
Paragraph 118. We welcome the Council
of Ministers' decision to reform the EU sugar regime. To have
left the regime unchanged would have signalled a distorted and
wasteful use of resource within EU agriculture (paragraph 17)
The Government is grateful for the Committee's
support and for the broad consensus among UK stakeholders in favour
of early decisions to bring sugar into line with other aspects
of CAP reform. Conclusion of these negotiations under the UK Presidency
represents a significant achievement and demonstrates the EU's
commitment to continued progress towards its wider trade and development
objectives.
Paragraph 119. We understand the anxieties
expressed to us by witnesses that a price cut of almost 40% is
too large. However, we believe that a substantial price cut is
necessary in order to reduce EU sugar production and eliminate
the need for the subsidised exports of surpluses. The Council
of Ministers did not agree the originally proposed cut of 39%
but we believe a cut of 36% will provide a clear and appropriate
signal to the industry about its future pattern of investment.
We are, however, concerned about the impact of the cut on growers
in certain ACP countries. (paragraph 26)
The Government agrees with this analysis and
strongly supported the Commission in resisting calls for a different
approach or for a less radical series of price reductions. The
final compromise does provide for a longer period of adaptation
and slightly smaller final cuts. But the Government shares the
Commission view that this will not materially affect the expected
benefits of reform or the prospects of achieving the necessary
degree of rationalisation and restructuring within the EU sugar
sector.
The Government shares the Committee's concerns
regarding the impact on ACP states but believes that, overall,
the effect of reforming the EU sugar regime will be beneficial
for developing countries, as it will reduce the market distortions
caused by the existing regime. We do however recognise that reform
will have a negative effect on some of the ACP Sugar Protocol
countries. This is why the UK Government is working hard to secure
adequate and timely transitional assistance to help ACP Sugar
Protocol countries adjust to reform. We want the Commission to
find at least €250 million per annum for transitional assistance
for ACP sugar producers, preferably through an extra budget line
in the new Development Cooperation and Economic Cooperation Instrument.
This is a matter to which the Government continues to attach great
importance.
Paragraph 120. The transitional measures
will continue coupled aid for some remaining beet growers. This
will sustain high cost production, preventing the sugar industry
from becoming fully competitive and weakening the EU's ability
to respond to the requirements of the WTO and developing countries,
(paragraph 34)
The Government is pleased that the final agreement
provides for mandatory full decoupling, with only a minor exception
in the case of those countries giving up at least 50% of their
quota, who will have the possibility of an additional coupled
payment of 30% of the income loss for a maximum of five years.
Paragraph 121. We consider that the compensation
being offered to growers is now too generous and we note that
there is no similar treatment for workers who lose their jobs
on farms or in the processing factories. (paragraph 35)
The Government notes these comments, but believes
that the final deal addresses much of the Committee's concern
in respect of grower compensation. One of the conditions attached
to the payment of the Restructuring Aid in respect of any processing
factories which close is that a social plan must be submitted
detailing the actions planned with respect to re-training, redeployment
and early retirement of the workforce. This includes provision
for similar measures on farms. In addition, there is an Aid for
Diversification which is intended to ensure national restructuring
programmes are in place in regions affected by factory closures
and loss of rural employment.
Paragraph 122. We share the concerns
of witnesses that direct payments might not be immediately completely
decoupled in all Member States. If that were the case, sugar growers
and processing companies in the United Kingdom would be placed
at an unjustified competitive disadvantage. The strategy of the
Commission in responding to the requirements of WTO would be undermined
and within the EU there would be a substantial continuing distortion
in the use of resources. (paragraph 39)
The final agreement is clear that grower compensation
is, with the exception covered by the Committee's paragraph 120,
to be fully decoupled and has to be incorporated into the Single
Payment Scheme model that Member States have already adopted.
This still provides for an element of discretion on the details
and the Government agrees that there are a number of issues that
need to be considered carefully before decisions are taken on
how that discretion will be used. The Government will be conducting
a consultation exercise on this issue shortly.
Paragraph 123. We are very concerned
that the November agreement raises the possibility that, in those
countries giving up at least 50% of their quota, farmers could
receive an additional coupled payment of 30% of the income loss
for a maximum of five years, plus national aid. This contradicts
the strategy of bringing production into line with market opportunities
through price cuts and the restructuring programme. (paragraph
40)
Paragraph 124. Given that the EU must
reduce production by approximately 8 million tonnes, the effect
of this coupled payment would be that producers who are more efficient
would be forced to reduce production to accommodate those who
are high cost. We call on the Council and Member State national
governments to ensure that all direct payments to sugar producers
are fully decoupled. Failure to comply should result in a penalty
being imposed by the Commission, such as the withholding of future
compensation payment. (paragraph 41)
The Government notes the comments in these two
paragraphs. As it has pointed out in response to paragraph 120
above, this is only a minor exception to the principle of fully-decoupled
grower compensation. Coupled payments are only available after
a member state has already lost more than 50% of its beet industry.
The payments are intended not to prop up inefficient beet production
but rather to help manage the decline and eventual disappearance
of that inefficient production.
Paragraph 125. We recognise that job
losses will result from the reform. However, we agree with the
Government that these losses are unavoidable if a competitive
EU sugar industry is to be built. As in other sectors, it will
be the responsibility of Member State governments to mitigate
the impact on displaced workers. (paragraph 47)
The Government agrees with the Committee's conclusions
which reflect the findings in the European Commission's own analysis,
that without reform around 15,000 jobs would be lost in the European
sugar industry by 2012. This is in addition to the 16,000 jobs
lost in the UK food manufacturing industry alone over the last
five years as set out by the UK Industrial Sugar Users Group in
their evidence to the Committee. This point has been covered in
the Government's partial Regulatory Impact Assessment (RIA) which
will now be updated to take account of the final reform deal.
As noted in response to the Committee's conclusion at paragraph
121 above, measures to mitigate the effects of restructuring are
explicitly provided for in the conditions for aid, those these
remain the responsibility of the member states and companies concerned.
Paragraph 126. The arrangements for the
setting of quotas per Member State and the prevention of quotas
being traded across frontiers is at the heart of the distortion
of competition within the EU. (paragraph 49)
The Government agrees that quotas hamper competition,
but it expects cross-border trade in sugar to increase once reform
is fully implemented. Over time the role of quotas in regulating
production is expected to diminish as the market adjusts to a
new balance of supply and demand.
Paragraph 127. It is disappointing that
the failure of the reform to remove quota or to make it transferable
between Member States seems likely to continue this distortion
of competition across Member States. (paragraph 51)
The Government notes the Committee's comments.
The purpose of quota transfer would have been to facilitate the
redistribution of production within the EU on the basis of efficiency
and comparative advantage. But it would not have reduced total
production. The voluntary restructuring scheme is designed to
achieve a similar market-driven rationalisation, combined with
lower output. The possibility of purchasing additional quota (within
defined limits) also allows the most competitive to increase their
quota share at a price which effectively limits the option to
those with the most sustainable basis for future operation.
It remains to be seen how the market will actually
respond to what is a fairly radical set of reforms. If there is
evidence of unfair practice on the part of commercial undertakings,
the Government is confident that the UK and European competition
authorities will act as appropriate.
Paragraph 128. The Committee notes that
the need for a transitional aid payment for full time refiners
arises because the market is both regulated and, at the processing
level, monopolistic. We believe it is the responsibility of the
Commission to monitor the working of the market and ensure continued
and robust competition between the cane and beet sectors. (paragraph
54)
The Government notes the Committee's comments
and agrees with its conclusion. In the final Presidency compromise
an additional amount of 150 million euros is to be made available
during the transition period (up to and including 2009-10) to
assist full-time cane refiners to adapt to the new regime. These
funds will be distributed proportionately between EU refiners,
on which 94.3 million euros would be available for the UK refiner.
Distribution of funds will be subject to the provision of a business
plan to be approved by the government of the member state concerned.
But this support will cease at the end of the transition period.
Paragraph 129. We note the concern of
witnesses about potential threats to the environment and the risk
that habitats valuable for some species of wild life might be
lost. It will be important that these issues are addressed by
specific environmental policies, where appropriate, during implementation
of the new regime. (paragraph 58)
The Government notes the Committee's concern
that with the implementation of a new sugar regime there may be
potential threats to the environment and the risk that habitats
valuable for some species of wildlife might be lost. The Government
believes that the best way of addressing this is through agri-environment
schemes rather than the continuation of an unsustainable level
of price support. Indeed, building on the successes of previous
agri-environment schemes, the Government launched the Environmental
Stewardship Scheme in March 2005 which aims to secure widespread
biodiversity and other environmental benefits. With Entry Level
Stewardship (ELS), which is open to all eligible farmers and land
managers in England, the aim is to cover 70% of farmland within
the next three years and, thus, to tackle countrywide problems
such as general biodiversity loss and diffuse water pollution.
Higher Level Stewardship. (HLS) aims to deliver significant biodiversity
and other environmental benefits in high priority situations and
areas. There are arable options in both ELS and HLS to provide
a range of habitat features such as winter seed and diverse cereal
stubbles for farmland birds and for Pink-footed Geese. In addition,
monitoring is either in place or under development that will allow
us to assess the effectiveness of the schemes in offsetting any
biodiversity losses due to changing farm practice.
Paragraph 130. There is a strong case
for exploring the possibility further of establishing a biofuel
industry, but in establishing such an industry, it is important
that sugar should be seen as only one potential source of raw
material and be used only where it could compete and could do
so without specific subsidy. (paragraph 60)
The Government agrees with the Committee's recommendation
concerning the development of a biofuel industry. As part of the
overall strategy for improving sustainability and reducing the
impact of climate change, the Government supports the production
of transport biofuels. However, the Government's climate change
programme emphasises the need for cost-effective measures to tackle
climate change. A cost-effective and viable biofuels industry
is about creating an industry independent of excessive levels
of subsidy and support must take account of the cost to the taxpayer.
Current support is not targeted at one particular biofuel feedstock.
The forthcoming incentives which will allow sugar beet for biofuel
use to be grown on set-aside and to be eligible for the €45/ha
Energy Aid payment on non set-aside land, currently apply to other
biofuel crops. The duty rate cuts for biodiesel and bioethanol
apply to biofuels derived from crops and from other sources such
as waste vegetable oils and animal fats. As part of the Renewable
Transport Fuels Obligation, the Government proposes to develop
a carbon and sustainability assurance scheme to ensure that the
best biofuels are used.
Paragraph 131. We support the Commission's
approach of implementing country-specific Action Plans in order
to mitigate the impact on ACP Sugar Protocol countries of the
reduction in the EU sugar price. (paragraph 71)
Paragraph 132. The gap between the sum
of money being offered and the estimated assistance required is
vast. An offering of €40 million without firm commitments
on further funding justifiably fuels the fears of ACP countries
that the funding required to adapt their sugar industries may
fail to be provided. (paragraph 76)
Paragraph 133. Witnesses from the ACP
countries were understandably anxious about the precise sources
of support money. We recommend that the Commission provides clarification
as soon as possible to the ACP countries of which Directorate
will have overall budgetary responsibility for the Action Plans.
(paragraph 77)
Paragraph 134. Implementation of the
proposals will create an immediate crisis of reduced revenue for
the ACP countries but the Action Plans can only offer solutions
for the long term. This makes it essential that assurance of funding
beyond 2006 is given by the Council of Ministers now in order
that ACP governments can begin the process of transition. (paragraph
78)
Paragraph 135. The Committee shares concerns
that continuing uncertainty impedes the necessary process of adjustment
to lower prices in the Sugar Protocol countries. It is imperative
that agreement is reached on the Financial Perspective soon in
order that firm commitments can be made on the future funding
to ACP countries. The uncertainty over the financing is a key
contributor to the anxiety the ACP countries are experiencing
as they prepare for reform. (paragraph 81)
Paragraph 136. The reform will be introduced
over a more gradual timeframe than the two years originally proposed.
It is important that this should not delay the action that is
needed to adjust ACP sugar industries to the longer term level
of price cut. (paragraph 83)
Paragraph 137. Ultimately the process
of adjustment cannot be escaped. For the ACP countries concerned,
the greatest benefit would come from aid to a longer term development
strategy rather than sustaining a high cost sugar industry. (paragraph
86)
Paragraph 138. We accept the need for
assistance to be tailored to the needs of each country and designed
to facilitate each country's long-term economic development. However,
the funding provision remains totally unsatisfactory. We strongly
recommend action by the Commission's DG Agriculture and DG Development
should be co-ordinated to ensure that funds are available on a
scale and at a time that reflects the scale of the problem the
ACP countries face. (paragraph 87)
The Government notes the comments on transitional
assistance for ACP countries contained in paragraphs 131 to 138.
It agrees that it is unfortunate that the EU's budgetary timetables
and the timetable of reform are such that agreement on the sugar
reforms was reached in Council before the budgets from which assistance
is to be funded were agreed. This has led to the current situation
of uncertainty for the ACP Sugar Protocol countries. It should
be emphasised that the €40 million of assistance that has
so far been confirmed is only for 2006. Further and more significant
assistance will be provided between 2007-13. Since the next Financial
Perspective is still being negotiated it is not possible to give
any figures on what levels of funding are likely to be however,
The Government agrees that it is necessary to provide certainty
to the ACP by deciding on these levels as soon as possible, and
would like to assure the Committee that the UK will be pressing
for adequate funding for sugar transitional assistance as part
of this process.
The Commission have proposed that funding for
2007-13 should come from the Development Cooperation and Economic
Cooperation Instrument in the External Relations budget in the
next Financial Perspective. No decisions have yet been taken on
this and discussions are ongoing. The new Financial Framework
agreed in December was a major step forward as it set the overall
EC budget limit, including individual Heading ceilings. The Austrian
Presidency will now take forward the consideration of detailed
allocations within each budget Heading, including the financial
costs of sugar transitional assistance to ACP sugar producers.
The longer phase-in period for price cuts for
the ACP under the terms agreed in November 2005 will give the
Sugar Protocol countries more time to implement adjustment programmes
before reform is fully implemented. It is important that assistance
is delivered as soon as possible to take full advantage of this
extended period. The UK Government has been working with the European
Commission and the ACP to make this happen—commissioning
studies of the likely impact of reform on the ACP and the LDCs
to inform debate about the need for transitional assistance, providing
£260,000 to fund the development of the country plans in
the Caribbean, and funding a workshop that initiated the process
of preparing these plans. As Presidency, the UK worked to facilitate
agreement on the Regulation that underpins the provision of assistance
in 2006. The Government has been strongly engaged in helping to
make effective EU transitional assistance a reality, and will
continue to do this.
Paragraph 139. It is important that the
EBA safeguard procedure only applies to triangular trade and is
not interpreted as the EU backtracking on its commitments to EBA
countries. (paragraph 90)
The Government agrees with the Committee. Least
Developed Country exports are important not just for their economies,
but also to maximise competition in the EU sugar market and ensure
that EU market prices are brought down to the new reference levels.
On 1 December Commissioner Fischer-Boel issued a letter to Dr
Ali Yousef Ahmed, Chairman of the LDC Sugar Group to clarify the
interpretations of the declaration, underlining that it is not
a retreat from commitments to EBA countries.
The Commission confirmed that the reform declaration
does not substantially depart from the GSP Declaration, except
that it does apply on a country specific basis. The Commission
also confirmed that the 25% threshold is only a trigger for opening
of procedures to decide whether safeguard measures need to be
applied, and not a threshold for the adoption of such measures.
The new regime is conceived in a way that the EU can cope with
these quantities without using these safeguard measures. Even
if the assumed quantities are reached or exceeded, it does not
automatically mean safeguard measures would be applied: an in-depth
analysis has to take place ensuring the necessary balance between
impacts on LDCs and Community producers.
Paragraph 140. The Committee notes the
concerns of witnesses worried by possible environmental implications
of changes in world production brought about by reform of the
EU sugar regime. However, we conclude that significant changes
in the global environment are unlikely to result from the EU reform.
(paragraph 100)
The Government notes the Committee's concerns
and confirms that environmental issues were considered as part
of the reform process, the principle objective of which was to
provide a sustainable framework for sugar production in the EU
and for ACP and LDC suppliers The Government has reached the same
conclusion as the Committee, as set out in the partial Regulatory
Impact Assessment.
Paragraph 141. Although the transitional
arrangements for coupled payments would only become effective
when a Member States reduces its quota by 50%, coupled payments
sustain high cost production. The transitional arrangements are
therefore in conflict with the underlying policy objective of
creating a competitive EU sugar industry. Furthermore, the allocation
of an additional 1.1 million tonnes of "c" sugar appears
to dilute the impact of the original proposal, whilst the decision
to allow Finland to provide a national aid of up to €350/ha
to its sugar producers provides a further conflicting signal.
This causes us considerable concern. (paragraph 102)
The Government notes the Committee's concerns.
It welcomes the decision to allow additional quota reflecting
former C-sugar production. This will help to dilute the influence
of production quotas and will help to bring down prices an the
internal market as discussed in the comment alongside the Committee's
paragraph 127.
Paragraph 142. We are concerned that
the price cut may not be severe enough to reduce overall production.
In that situation, the Commission should implement a further price
cut rather than a flat rate quota cut. (paragraph 107)
The Government notes the Committee's comments.
The Commission will be reporting on the progress in reducing production
through the restructuring scheme by the end of 2008. Our own analysis
suggests that if prices fall to the new levels, it will be sufficient
to bring the EU market into balance. The Government agrees that
price reductions are more effective than quota cuts. Nevertheless,
it is clear that there will be a very large sugar surplus on the
EU market in the first year of the reforms and the Commission
have made clear that they will use all of the mechanisms for market
management that are open to them in order to limit this surplus.
Paragraph 143. We recognise the widespread
resistance to the removal of quotas among Member States but believe
that if the price cuts and restructuring process are successful,
quota will become redundant and should be removed. in that context
the requirement to leave the new regime unchanged until 2014 is
inappropriate. (paragraph 111)
The Government notes the Committee's views.
The UK has consistently argued in favour of phasing-out all production
quotas in a reformed CAP. The difference between the agreed reforms
and some of the Commission's earlier ideas is that the reduction
in EU production capacity will be a voluntary process. By radically
cutting prices, in order to discourage production in high cost
regions and by facilitating increased quota production in more
efficient regions as well as in alternative sweeteners, the agreed
reform moves decisively towards a situation where quotas would
no longer be necessary. Monitoring and evaluation will be important
over the coming years in order to form the basis for further change
as appropriate.
Paragraph 144. As stated in our earlier
report, we strongly support the need for the WTO to provide practical
and effective means for agricultural liberalisation. The EU can
no longer postpone action on difficult issues. Every effort should
be made to reach agreement within the Doha Round. (paragraph 115)
Since the Committee's report was published last
year, the 6th Ministerial meeting of the World Trade Organisation
(the WTO) took place in Hong Kong (13-18 December 2005). The outcome
at Hong Kong might not have been as ambitious as many had hoped,
but it did take some significant steps forward.
The main achievements at Hong Kong were:
— Agreement to end all export subsidies
by 2013 and a substantial part to be realised by the end of the
first half of the implementation period.
— Extending duty-free and quota free
market access to 97% of products originating from Less Developed
Countries.
— An agreed date to end cotton export
subsidies by 2006.
— New commitments were pledged from
the EU, US and Japan on aid for trade beyond the ambition of Gleneagles.
People had lowered expectations for Hong Kong
but a key part of what we did achieve was down to the EU—in
particular, on agreeing to an end-date on export subsidies. There
is much significance in the EU signing up to this, showing that
they are prepared to face up to difficult issues in order to secure
a deal.
The Hong Kong text has set the end of April
2006 for agreement on modalities (the final architecture of a
deal) in agriculture and NAMA (Non Agricultural Market Access)
and substantive conclusion of the Round by the end of 2006. The
UK and the EU are committed to achieving this deadline.
Having agreed to the elimination of all export
subsidies by 2013, WTO members can now concentrate their efforts
on coming to an agreement on other aspects of the negotiations,
including a tariff reduction formula to provide substantial increase
in market access. The EU put forward a proposal, including this
formula, on 28 October 2005 and a number of other parties have
also put forward their own proposals. Further negotiation from
all WTO members is now urgently needed in agriculture and in other
areas of the Round, such as NAMA, in order for the Round to move
forward. The UK Government continues to seek to persuade other
WTO members of this need for constructive engagement. We agree
that every effort should be made to reach agreement within the
Doha Round.
Paragraph 145. While we welcome this
reform, it must be seen as only a step towards a sugar industry
that is able to compete in a world market without the need for
levels of protection substantially greater than those given to
other sectors of the EU economy. (paragraph 117)
The Government agrees with the Committee's analysis.
Defra's Regulatory Impact Assessment sets out clearly the very
substantial economic welfare and consumer costs of the existing
regime. It also analyses what a fully-liberalised EU sugar market
would look like. The agreed reforms reduce the costs by roughly
half. That in itself represents a very significant achievement,
particularly as all previous attempts at reform in this area have
not succeeded. The Committee will however be aware of the Government's
Vision paper for CAP reform which sets out its ideas on the way
forward for the CAP more generally.
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