Media release
16 October - MVT84/2004
WTO Supports Australia on EC Sugar Subsidies
Trade Minister Mark Vaile today welcomed the public release in Geneva of a WTO dispute settlement report which has found that European Community (EC) export subsidies on sugar exceed its WTO obligations.
"In a great win for hard-working Australian sugar farmers, the Panel has today agreed with Australia that the EC is in breach of its WTO obligations in relation to sugar export subsidies," Mr Vaile said.
The EC has been cross subsidising exports of surplus sugar at levels of up to 3 million tonnes and excluding from its export subsidy reduction commitments directly subsidised exports of 1.6 million tonnes. The Panel found that both schemes are WTO inconsistent.
The Panel upheld claims by Australia, Brazil and Thailand that the EC must limit its export subsidies in the sugar sector to €499 million (A$ 838 million) on a total quantity of 1.273 million tonnes a year.
Mr Vaile said the EC has been spending up to €1.3 billion (approximately A$ 2.2 billion) a year on an annual average of more than 5 million tonnes of sugar exports. Subject to appeal, the findings would require the EC to withdraw up to 4 million tonnes a year of subsidised exports from the world market and to more than halve its annual budgetary outlays on export subsidies
Panel reports are subject to appeal and legal outcomes might not be finalised before the first quarter of 2005. But that time frame would not prevent the EC from reducing its export subsidies as part of a 2005 package of reforms to its sugar regime. The EC is currently proposing to defer consideration of the export subsidy elements of reforms until 2008.
As the Panel has confirmed - and as the EC has now acknowledged - there is no reason why EC implementation of its export subsidy obligations should affect the access currently provided to some developing country sugar exporters in Africa, the Caribbean and Pacific (including Fiji).
Australia had previously given assurances to Fiji and others that it would not seek to challenge their preferential access to the EC market and has consistently called on the EC to guarantee that it would continue to honour its commitments to those countries.
The Panel report is available on the WTO website.
Contact: Matthew Doman 02 6277 7420, DFAT Media Liaison 6261 1555