SUGAR IMPORTS INTO BULGARIA AND ROMANIA
(16902/06)
Letter from the Chairman to Lord Rooker,
Minister of State for Sustainable Farming and Food, Department
for Environment, Food and Rural Affairs
Your Explanatory Memorandum on the above proposal
was considered by Sub-Committee D at its meeting of 21 February
2007.
We endorse the approach adopted by the Government
given that there are grounds to believe that the proposed measure
could give Bulgarian and Romanian refiners a competitive advantage
over the UK refiner.
The actual level of that competitive edge is
intimately linked to the successful implementation of the Sugar
Reform (Regulation 318/2006) agreed under the UK Presidency in
2005. In that light we would be interested to receive you assessment
on the success or otherwise of its implementation thus far.
As we share the Government's reservations in
regard to this Proposal, we are not lifting our scrutiny of it.
We commend the Government's approach, however, we would be grateful
if you would report back to us on its success or otherwise.
21 February 2007
Letter from Lord Rooker to the Chairman
Thank you for your letter of 21 February relating
to the above proposal. I am afraid that I cannot claim any success
in our opposition to this Commission proposal. When it was discussed
in the Special Committee for Agriculture we made clear both to
the European Commission and to the current EU Presidency that
we could not support this measure. Ours proved to be a lone voice
in opposition, with all other Member States supporting the proposal.
There are rather few Member States with a sugar
cane refining industry, and the UK has by far the largest. Given
the overwhelming majority in favour of the proposal, it is now
expected that this item will be presented to the Agriculture Council
for adoption as an "A-Point" shortly.
Separately, you asked how the 2005 sugar reforms
adopted under the UK Presidency were progressing. Generally speaking,
the measures introduced by Regulation 318/2006 are progressing
well. The new arrangements introduced by that Regulation on sugar
prices and quota management have been in place since 1 July 2006
and no major problems have occurred. But I am far less sanguine
about the implementation of Regulation 320/2006 which was introduced
at the same time. This Regulation established a Voluntary Restructuring
Scheme, the main mechanism through which the EU is to reduce its
sugar production to manageable proportions.
The Restructuring Scheme is set to last for
four years and was designed to help producers to close factories
in situations where they are no longer viable under the new pricing
structure. This scheme is intended to remove up to six million
tonnes of production and is funded by a compulsory levy on sugar
production. There were a good number of applications to the Scheme
in the first year, amounting to around 1.5 million tonnes. Unfortunately
this progress has not been maintained in the second year. The
deadline for applications in year two passed on 31 January 2007
and applications for only around 650,000 tonnes were received.
Commissioner Fischer Boel commented at the November
and December 2006 Agriculture Councils that the Restructuring
Fund was not being allowed to operate as intended and that too
few companies were benefiting from its existence. She announced
on 29 January that 2 million tonnes would have to be withdrawn
from the EU sugar market in the 2007-08 sugar marketing year to
allow the market to function properly in the short term. The first
steps to achieve this withdrawal were agreed at the 22 February
Sugar Management Committee using the powers contained in Articles
19 and 42 of Regulation 318/2006. More fundamentally, the Commissioner
also announced that the Commission would come forward with proposals
in regard to the operation of the Restructuring Fund, with the
purpose of making it more efficient and to ensure that sufficient
quota was renounced by the industry in the coming years. She said
that the main objective must be to avoid a simple linear cut at
the end of the restructuring period to the detriment of the sustainability
of the whole sector.
This is a disappointing situation and we shall
be seeking to ensure that the reforms are put back on track through
appropriate amendments to the Restructuring Scheme for its remaining
two years. We currently understand that the Commission's intention
is to make proposals to Council in April with the objective of
obtaining agreement by September.
8 March 2007
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