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Commonwealth Meeting Asks EU For Better Sugar Compensation
by Amanda Banks, Tax-News.com, London

30 November 2005

Prime Minister Owen Arthur of Barbados accused the EU of bad faith in offering ACP nations miniscule compensation in its proposal to cut guaranteed sugar prices by 36% over the next four years.

Speaking at the end of a Commonwealth summit in Malta last weekend, Owen Arthur said: "We don't feel that Europe is negotiating in good faith with us and we will do everything possible not to be ignored."

The summit urged the EU to treat the ACP farmers the same way they're treating their own farmers, who are receiving EUR 6 bn compared to the 40 million Euros being offered to the ACP.

"We were very pleased that the Commonwealth meeting urged the EU ," said President Bharrat Jagdeo of Guyana on behalf of the ACP. "We don't want charity. We want Europe to live up to its agreement with us," he said.

Negotiating in Brussels last week, the EU's agriculture ministers agreed on the improved 36% offer, rather than the 39% previously proposed over two years, a deal which had been roundly rejected by the ACP.

EU farmers will receive compensation for 64.2% of their losses, and will have access to a €7.5 billion restructuring fund.

According to reports in the European media last week, only Poland and Greece have expressed strong opposition to the compromise brokered by the UK presidency. "The rest were not 100 percent happy, but there was widespread support in any case, enough for the presidency to say 'I see we have agreement'," an unnamed EC official told the EU Observer.

Concessions by the EU are seen as a key aspect of the run-up to the crucial WTO Doha Round summit in Hong Kong next month.

Previously, the ACP had circulated their own proposals, complaining that the EU's own proposals are far too harsh, and that it continues to subsidize its own refiners. The ACP wanted a net price cut of 19% spread over 8 years starting in 2008 with the retention of refining aid of 5.1%.

“We have not plucked this figure out of thin air. A net reduction of 19% over 8 years with the retention of refining aid would be fully in line with the EU’s WTO commitments, despite what the Commission may claim to the contrary. From our perspective, while far from ideal, it would allow more ACP producers to remain competitive and offset the economic and human suffering that will inevitably be caused by the drastic reform,” said George Bullen, Chairman of the ACP Consultative Group on Sugar.

The EU's existing sugar regime and an earlier, weaker, set of reform proposals, have been condemned by World Trade Organisation arbitrators following a complaint from Australia, Brazil and Thailand. At the moment, the EU offers a guaranteed price for sugar that is about three times the average world market price.

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