28 Apr WTO Watch: Just What We Need, Cheaper Sugar
28.04.05
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2 Comments
The WTO Appellate Body confirmed a lower panel ruling that the EU’s system of subsidies for sugar producers violates WTO rules. The U.S. sugar subsidy system was similarly found in violation by a separate lower panel and this ruling suggests the U.S. will lose its appeal as well. Although it is unclear whether reducing the cost of say, Krispy Kremes, is really a good thing for America, see this release by Oxfam, the leading NGO critic of agricultural subsidies, for why this is very good for the developing world.
Will the U.S. and E.U. comply? These rulings really will test whether the WTO can overcome the opposition of very powerful domestic special interests.
The US sugar program was NOT the subject of a WTO dispute settlement proceeding. Only the EC sugar regime was challenged by Brazil, Australia and Thailand.
You may be confusing Brazil’s successful challenge to US subsidies on cotton with sugar.
The likely effect of full implementation of the WTO ruling by the EC will NOT be to make sugar cheaper, but more expensive — by taking considerably quantities of EC sugar off the market. This will mean higher commodity prices for other sugar producers that sell on the world market, mostly developing countries.
“The WTO Appellate Body confirmed a lower panel ruling that the EU’s system of subsidies for sugar producers violates WTO rules.” Actually, the Appellate Body confimed that the amount of subsidies given by the EU to its sugar producers violated WTO rules, which had set a particular ceiling in the late-1990s. WTO rules, in fact, do allow subsidies, but under strict conditions.