European Sugar Policy Works to Undermine Trade With Asia

The reputation of the European Union as an economic fortress, a fortress particularly ambivalent to the rise of Asian economies, has solidified in recent weeks. Oxfam, a leading international non-governmental organisation, has produced a study that shows that several big companies have come out on top as a result of the EU's skewed sugar regime, which has been found to hurt poor countries. Oxfam has also challenged the EU's claim that it is a "non-subsidising exporter" by referring to recent analysis that shows that the EU is in fact the world's biggest subsidiser and dumps around five million tonnes of sugar on the world market every year. Brazil and Thailand each year lose an estimated US$494 million (Bt19.5 billion) and $151 million respectively because of European sugar-dumping.

EU taxpayers have been assessed to be giving $819 million in subsidies each year to six European sugar-processing companies to dump unwanted sugar on world markets. Beghin Say (France), Sudzucker (Germany) and Tate and Lyle (Britain) are among the companies named in Oxfam's new report.

Jo Leadbeater, the head of Oxfam International's EU Advocacy Office, said: "This is a sugar scandal, and there is nothing sweet about it. The EU sugar regime is long overdue for reform. The system rewards big companies and rich farmers with EU taxpayers' and consumers' money while denying people in the developing world the chance to trade their way out of poverty."

Meanwhile a sinister-looking new trade act is currently being formulated in Brussels. The Financial Times reported last week that the EU planned to splinter opposition to its Common Agriculture Policy by offering members of Mercosur, the Latin American customs union, a deal aimed at winning their support in the Doha trade round.

The move is designed to weaken pressure on the EU to lower its farm-trade barriers by effectively buying off Argentina, Brazil, Paraguay and Uruguay with the offer of preferential trade concessions. The tactic is seen as threatening to split the 18-member Cairns Group, of which Thailand is a member, as well as the Group of 20, led by Brazil, India and China, which has called on rich nations to reform their farm policies.

Thailand surely will need to mobilise its alliances in the Cairns Group and among other developing countries to counter a tactical move by the EU to derail further global farm-trade reform. It is not just that global farm-trade liberalisation is essential to this country, but also that the EU's new thrust will encourage Japan, another farm-trade fortress, to open up its own market a little.

In other words, the government of Prime Minister Thaksin Shinawatra should not limit its focus to free-trade negotiations with India, China, Japan, Australia and the US. It should also be looking over its shoulder to guard against Brussels' attempts to derail global farm-trade liberalisation. This country has already demonstrated great tolerance towards the unfair treatment that has resulted from the EU's trade and non-trade barriers.

Sure, the bigger and richer countries always have the bargaining edge, but the EU has shown time and time again that its Asian policy is secondary when it comes to protecting its own markets. It is no wonder that people have such little hope for the Doha round of global trade negotiations. The EU has thrown its weight behind trade protectionism.