Brussels, 26/02/2002 (Agence Europe) - The Union's policy relating to sugar exports is totally compatible with the rules of the World Trade Organisation (WTO), stressed a Commission spokesperson following the announcement of an imminent Brazilian offensive against the refund system and against the practice consisting of re-exporting sugar originating in the States of Africa, the Caribbean and the Pacific (ACP).
Brazil considers that the Union - its major rival on the world sugar market - distorts fairness in trade by subsidising the export of this product, thereby pushing prices below average production prices. In this complaint, the Brazilian authorities should refer to Geneva's verdict against Canadian dairy subsidies. They also intend denouncing the practice consisting in importing crude sugar from the ACPs free of customs duties, due to preferential treatment granted to them by the Union, and then re-exporting it to other third countries. Although the Cotonou Agreements benefit from an exemption to WTO rules, Brazil considers that this practice must be considered as an export subsidy, in reference to the WTO conclusions on the Union's banana scheme. These "unfair subsidies" are said to be at the origin of a lack of income in the order of $1 billion for Brazilians, in terms of unattained sales potentials. Their sugar exports are, however, rising steeply, having increased twofold in a year to amount to 11.2 million tonnes (or a value of $ 2.28 billion) in 2001. Likewise for production, that this year should reach a record level.