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TRADE:
Brazil Deals Another Blow to Farm Subsidies

Mario Osava


RIO DE JANEIRO,  (IPS) - The Brazilian government and farmers celebrated a third triumph so far this year against the farm subsidies shelled out by the industrialised North after the World Trade Organisation (WTO) handed down an interim ruling Wednesday that found that the European Union (EU) is illegally dumping millions of tons of subsidised sugar on the world market.

The results that Brazil has achieved show that the developing world ''must file other complaints'' in the WTO, to get wealthy nations to live up to what was agreed in the 1986-1994 Uruguay Round of talks that gave rise to the WTO, Pedro Camargo Neto, the director of international relations in the Brazilian Rural Association, which represents the country's large agricultural producers, told IPS.

Brazil already scored a similar victory in April in a complaint brought against subsidies to U.S. cotton farmers, which were found to drive down prices, with serious effects on millions of poor families in Africa whose livelihoods depend on cotton farming.
 


 

 

Another conquest celebrated by Brazil was the agreement reached Sunday that put the Doha Round of WTO trade talks back on track when the rich countries committed to eliminating agricultural export subsidies and to substantially reducing all domestic supports for agriculture.

The successful complaints brought by Brazil in the WTO helped get the Doha Round going again and vice versa, said Camargo, who promoted a more aggressive, proactive stance by the country in trade disputes when he served as secretary of production and marketing in the Agriculture Ministry in 2002.

The favourable rulings obtained in the case of cotton and sugar subsidies also represent a personal triumph for Camargo, who had to overcome resistance and reluctance in Brazil's diplomatic corps to file the complaints with the WTO.

In the case of sugar subsidies, the interim report by the WTO dispute settlement panel was handed to the concerned parties -- Brazil, Australia and Thailand -- Wednesday. The three countries had brought the complaint against the EU's subsidised exports of sugar, which exceed the limit set by the Uruguay Round.

The WTO came down against the exports of excess subsidised sugar produced in the EU as well as the 1.6 million tons of sugar that the bloc imports from the African, Caribbean and Pacific (ACP) countries and India under preferential conditions and which it refines and re-exports with subsidies.

According to Jo Leadbeater, head of Oxfam International's Brussels office, ''This ruling is a triumph for developing countries and a death knoll for unfair EU sugar export subsidies, which undermine poor farmers' livelihoods and deny them the chance to trade their way out of poverty.''

The international relief and development organisation said in a statement that ''EU dumping depresses world prices and led to foreign exchange losses in the region of 494 million dollars for Brazil, 151 million dollars for Thailand, and 60 million dollars each for South Africa and India in 2002.''

The dispute settlement process is still confidential, and the final result is not due until mid-September. At that point, the EU will have the opportunity to appeal, which means the final outcome could be delayed until early 2005.

Brazilian Foreign Minister Celso Amorim merely said he was ''very satisfied'' with the initial ruling.

Brazil's Agriculture Minister Roberto Rodrigues was less circumspect and celebrated the decision which, he said, would allow this country to increase its sugar exports by 10 percent -- an increase of more than one million tons a year -- starting next year.

Camargo said the EU had already anticipated and admitted its defeat when it modified its sugar regime two weeks ago, cutting subsidised production from 17 to 14 million tons. The bloc is trying to make it look like it will reform its sugar policy ''on its own initiative,'' and not due to the defeat in the WTO, said the analyst.

As the ''most competitive producer'', Brazil should conquer a large part of the market that will no longer be supplied by the EU, Rodrigues predicted.

As a consequence of the illegal European subsidies, Brazil exported an annual 400 million dollars less in sugar, according to the country's sugar producers. Brazil produced 23.6 million tons of sugar in 2002 -- 16.6 percent of the global total -- of which it exported 13.4 million tons.

The Union of Sugar Cane Agribusiness of Sao Paulo (UNICA), which links Brazil's biggest sugar producers, hopes to increase exports by 500 to 700 million dollars a year if the EU complies with the WTO ruling.

The most important thing is that the outcomes of the sugar and cotton cases marked ''a watershed in global trade of farm products'' by condemning subsidies, said Eduardo Pereira de Carvalho, president of UNICA.

Camargo lamented that the sugar case had been delayed, saying that ''Perhaps it would have helped avoid the failure in Cancun,'' Mexico in September 2003, when the Doha Round basically collapsed at the fifth WTO ministerial conference.

But it is only now that the EU position has ''matured,'' he said, thus paving the way for changes.

Curiously, he added, the EU, which ''has always admitted to being protectionist,'' is willing to modify its agricultural regime, while the United States does not want to yield on the question of cotton, "despite its defeat in the earlier WTO ruling and the way it loudly touts free trade,'' he added.


 

 
   

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