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Fri, Aug 06, 2004 - Page 12 News List

Sugar producers celebrate WTO ruling against the EU


Sugar prices could soar 10 percent under a WTO ruling against Euro-pean subsidies that was being cheered by the major producing countries of Australia, Thailand and Brazil yesterday.

The big three producers had accused the EU of breaking trade rules with unfair sugar export subsidies and predicted the EU would have to sharply slash its exports if the preliminary ruling is made final.

"This is a significant win for Australia," Warren Males of Queens-land Sugar Ltd said, echoing similar triumphant remarks from Thailand, the world's second largest sugar exporter and Asia's biggest.

Thailand, which exports around 7 million tonnes of sugar each year worth about US$1.4 billion, "will gain from the ruling", said a senior official at the Thai Sugar Millers Association.

"The world sugar price is expected to rise by at least 10 percent," he said.

Queensland Sugar, Australia's monopoly raw sugar exporter, and the farmer group Canegrowers said the impact on world prices would be significant, but it was too early to tell just how high prices would go.

Canegrowers calculated the ruling would slash EU sugar exports by around two-thirds, to about 1.3 million tonnes a year, or sharply lower than the 4 million tonnes the EU shipped this year.

"A reduction in supply of around three million tonnes will have a market impact, no question about that," said Canegrowers general manager Ian Ballantyne. "We're hugely buoyed. We think it's a major victory for trade."

Australia, the world's third largest sugar exporter which ships 4 million tonnes of raw sugar each year worth A$1 billion (US$700 million), argued along with Thailand and Brazil that the EU subsidies had increased production artificially and depressed world prices.

Oxfam called the decision "a triumph for developing countries and a death knell for unfair EU sugar export subsidies."

The preliminary WTO ruling is confidential and a final ruling should be issued next month after both sides have had time to comment, although final rulings rarely differ from the preliminary ones.

Each side is able to appeal and it could be another year before the decision takes effect.

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