Bitterness at EU sugar subsidies

The EU says its sugar policy helps developing countries

The European Union's sugar subsidies are at the centre of a growing trade row over whether developed countries are crippling the sugar industry of poorer nations.

Two of the world's biggest sugar exporters, Brazil and Australia, have lodged a complaint against the EU's subsidies with the World Trade Organisation (WTO).

In its filing, Brazil said the EU was dumping subsidised sugar on the world market, unfairly displacing exports from other countries and depressing international prices.

The EU has rejected the charge, saying its financial support for sugar beet growers and export subsidies does not breach global trade rules.

EU 'backs poor growers'

An EU spokesman said that the trade bloc was the biggest importer of sugar and hence a major supporter of farmers in poor countries

"If they are attacking the EU, they are attacking developing countries," said Gregor Kreuzhuber, the European Commission's agriculture spokesman.

The complaints will trigger mediation under the chairmanship of the WTO. Talks are likely to take place over the next two months.

"This WTO action will force Australia to consider the interests of other sugar producers," said Australian trade minister Mark Vaile.

The talks are the first step in a lengthy process which could lead to a WTO ruling on the legitimacy of the EU's sugar subsidies and sanctions if the complaints are upheld.

The EU's subsidies to sugar beet farmers and refiners amount to about 1.5bn euros (£940m; $1.5bn) a year.

Oxfam's concern

Sugar is grown in many of Africa's poorer countries including Ethiopia, Mozambique and Uganda. Brazil is the biggest exporter of cane sugar.

The British charity Oxfam recently called for a 25% cut in EU sugar production quotas to improve market conditions for farmers in developing countries.

The EU is one of the world's highest-cost sugar producers and supplied nearly half of global white sugar exports last year.

Oxfam has criticised the EU for setting a 140% tariff on sugar imports which, it said, excludes growers like those from Mozambique - among the cheapest producers - from European markets.

Special measures

Weak sugar prices have led several governments to take action to help their farmers.

The Australian government has recently agreed on a package of measures worth A$150m (£52m; $81m) to support sugar farmers, to be funded by a tax on retail sales of sugar.

In Fiji, the prime minister has took over responsibility for the sugar industry in September to oversee the restructuring of the country's loss-making state-run producer.

"You cannot blame the EU for price fluctuations, which are dependent on many international factors," said Mr Kreuzhuber.

He said the EU accepts 1.6 million tonnes of sugar imports under poverty alleviation programmes with the ACP grouping of African, Caribbean and Pacific nations.

Some of these imports are re-exported by the EU, he said.