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A rapacious predator

Posted by Richard Thursday, August 05, 2004

For all the rhetoric, the honeyed words, the pious statements of intent and all the other extruded verbal material emanating from Brussels about the welfare of developing countries, the EU has been shown up for the rapacious predator that it really is.

That is the real meaning of the provisional WTO ruling issued yesterday, which confirmed that the EU has been illegally dumping millions of tonnes of cut-price sugar on world markets.

The case was brought to the WTO disputes body by Brazil, Thailand and Australia against the EU, which found that the EU exports up to four times more subsidised sugar each year than allowed under world trade agreements, amounting to five million tonnes each year. This is despite the EU's commitment under the Uruguay round of trade talks to reduce its subsidised exports to just over one million tonnes a year (which, incidentally, makes a mockery of any its promises made in the Doha round).

Oxfam estimates that the effect of the EU's dumping has been to depress world sugar prices by 23 percent. In 2002 this led to foreign exchange losses of about 494 million dollars for Brazil, 151 million dollars for Thailand, and 60 million dollars each for South Africa and India – that is over £400 million stripped from the economies of these countries alone.

If that was not bad enough, the EU has also been found guilty of subsidising the re-export of 1.6m tonnes of sugar - the equivalent of imports from the African, Caribbean and Pacific (ACP) countries and India - also in contravention of WTO rules.

Once again the main culprit is France. French sugar production fluctuates between 4.5 and 5 million tons per annum, most of it derived from sugar beet, yet its consumption is relatively stable at around 2.2 million tons. Thus France exports between 2.5 and 3 million tons of sugar, in a market already over-supplied.

With the EU-15 producing just over 15 million tonnes a year, and consuming slightly over 12 million tonnes, French over-production accounts for almost the entire surplus. Having failed (or refused) entirely to cut its production, France is therefore largely responsible for the dumping on the world market which has done so much to damage developing countries.

While all this has been going on, however, the EU has been parading its credentials as the world's largest donor of humanitarian aid, the EU contribution in the last year being in the order of £350 million. This is utter hypocrisy as the cash siphoned out of the developing world by the sugar regime far exceeds that amount.

Thus, the EU gives with one hand and wrecks with the other, all the time uttering pious platitudes about its generosity to less fortunate countries. That is the nature of the beast.