SAO PAULO, November 28, 2011 - “The EU cannot behave as if the marketing year is suddenly 15 and not 12 months long. This is an illegal move that will most likely be questioned at the next agricultural committee meeting of the World Trade Organization.” With that reaction, the Head of International Affairs at the Brazilian Sugarcane Industry Association (UNICA), Geraldine Kutas, joined producer organizations from other parts of the world in condemning the EU’s decision, announced on November 24, to export an additional 700,000 tons of sugar out-of-quota as of December 1st.
“The strategy appears to be an attempt to circumvent decisions that the EU should be upholding before the global community. It is clearly in breach of commitments under WTO rules for sugar exports,” added Kutas. The approval of additional EU exports of out-of-quota sugar followed a decision in April to export 650,000 tons of sugar as of January 1st, 2012. The two announcements push the total volume of EU out-of-quota sugar exports to 1.35 million tons in the 2011/2012 season.
The total is equal to the maximum amount of out-of-quota sugar exports the EU is permitted in each marketing year under existing WTO agreements. Sugar producers in Brazil and Australia argue the EU is in fact exceeding its WTO limit for the 2011/2012 season, because the additional 700,000 tons, for delivery between September 1st and the end of this year, fall mostly within the current marketing year.
According to the Australian Sugar Industry Alliance, the decision actually raises the total amount of EU sugar exports between October of 2011 and September of 2012 to 2.05 million tons, which exceeds the EU’s WTO export commitment by more than 65%. EU officials say the exports approved last April came out of the bloc’s “unused” WTO export quota for the previous marketing year (2010/2011).
Also on November 24th, the EU decided to allow the sale of 400,000 tons of out-of-quota sugar for food use within the bloc at reduced levies and open a tendering system for raw sugar imports from all non-EU countries, also at reduced import duties, to be refined in Europe. Normally, the EU applies duties of (euro) 339 per ton of raw cane sugar for refining, which it purchases mainly from Brazil.
Out-of-quota sugar is an expression used to describe EU sugar produced in excess of national production quotas, which ends up either being exported until the EU’s WTO limit is filled, or sold for biofuel production or industrial uses. “The EU’s decision amounts to little more than an accounting trick, to allow for an increase in sugar exports within the 2011/2012 season. This is clearly something that should not go unnoticed,” concluded Kutas.