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« EU loses a landmark sugar case at the WTO », by SAPA-AP & Blomberg, business Report, 29 April 2005

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ESC Grenoble

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  1. Executive summary
  2. Introduction
  3. The agriculture industry
    1. The trade of agricultural products
    2. Commercial policies before the institution of the World Trade Organisation
    3. Agricultural negotiations of the Uruguay Round
    4. The agreement on agriculture
  4. Sugar case
    1. The complaint
    2. WTO's reaction
    3. Consequences
  5. Conclusion
  6. Bibliography

The trade of agricultural products is increasing a lot all over the world. In many countries (mainly the poorest ones), agriculture is the dominant sector of the economy and plays a very important role. To control the trade of agricultural products and to limit unfair practices, international negotiations have been set up for years. After the creation of the World Trade Organisation, the Agreement on Agriculture had been firmed, setting many rules on that market. The main objective of that agreement is to limit domestic support, export subsidies and to give a better access to market. In 2002, European Union was accused by Brazil (followed by Australia and Thailand) of not following these rules on the sugar market. Indeed, European Union promotes its own products thanks to subsidies, which distorts the market. The WTO concludes that European Union is in violation with the Agreement on Agriculture and has to stop those practices before 2007. If not, sanctions will be taken against European Union.

[...] Uruguay Round participants agreed that developed countries would cut the tariffs (the higher out-of-quota rates in the case of tariff-quotas) by an average of in equal steps over six years. Developing countries would make 24% cuts over 10 years. Several developing countries also used the option of offering ceiling tariff rates in cases where duties were not ?bound i.e. committed under GATT or WTO regulations) before the Uruguay Round. Least-developed countries do not have to cut their tariffs. For products whose non-tariff restrictions have been converted to tariffs, governments are allowed to take special emergency actions (?special safeguards?) in order to prevent swiftly falling prices or surges in imports from hurting their farmers. [...]

[...] Also permitted, are certain direct payments to farmers where the farmers are required to limit production (sometimes called ?blue measures), certain government assistance programmes to encourage agricultural and rural development in developing countries, and other support on a small scale minimis?) when compared with the total value of the product or products supported or less in the case of developed countries and 10% or less for developing countries). Export subsidies The Agriculture Agreement prohibits export subsidies on agricultural products unless the subsidies are specified in a member's lists of commitments. [...]

[...] Sugar case European Union is accused by some countries not to respect the WTO rules in the sugar industry. Sugar is one of the European Union's most heavily subsidized crops, and the government supports have helped European sugar producers become the second-largest exporters in the world, behind Brazil, which is also the largest sugar producer. Why these countries are complaining for? a. The complaint European Union is accused of distorting the world sugar market, which remains unfair. Brazil was the first complainant country, and starts the procedure in 2002 along with Australia and Thailand. [...]

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