Media release

Australian Minister for Trade, Mark Vaile

September 09, 1999

APEC should lead on cutting sugar barriers

Trade Minister, Mark Vaile, has used the APEC meetings in Auckland to argue for global sugar market liberalisation to be a priority for new negotiations on agriculture in the WTO.

"Australian producers are the most competitive in the world, yet they suffer from sugar being one of the most distorted commodity markets in the world," Mr Vaile said.

Mr Vaile called upon APEC members to commit to removing unfair subsidies and market access barriers that prevent the free trade of sugar.

"There is considerable potential for APEC to give a lead on international sugar market reform because some of the world's largest importers and exporters of sugar are APEC members," Mr Vaile said.

In Auckland Mr Vaile released an analysis of APEC economies' "Policies Affecting Market Expansion of Sugar that set out the benefits from reducing barriers to trade in sugar and domestic support policies in sugar industries of APEC economies.

The study showed APEC sugar trade liberalisation would deliver a net welfare gain for the APEC region. For the United States alone, the estimated net welfare gain was estimated to be almost US$300 million a year.

The study also showed that world sugar prices would be about 25 per cent higher by 2004 if Japan, China, Mexico, South Korea and Canada removed tariffs and the United States eliminated existing support policies for sugar. At the same time, consumers in these countries would be better off from a reduction in artificially high domestic sugar prices.

Japanese sugar producers receive around 60 per cent of their gross incomes from government measures that inflate domestic sugar prices at the expense of Japanese consumers. In the US, government support accounts for around 40 per cent of producer' revenues.

These findings are part of a larger project being undertaken by the Australian Bureau of Agricultural and Resource Economics (ABARE) and Sparks Commodities, Inc. of the United States. Mr Vaile plans to release a more comprehensive global report on sugar trade liberalisation at the Seattle WTO Ministerial Conference.

COPIES OF THE REPORT ARE AVAILABLE FROM THE DFAT WEBSITE OR BY TELEPHONING BRUCE BENNETT ON 02 6261 2704.