European Union agrees to cut sugar support prices by 36 percent

European Union agrees to cut sugar support prices by 36 percent

BRUSSELS, Belgium - The European Union's decision to cut subsidies given to sugar producers by 36 percent over the next four years, might spur Thailand and Australia to increase their sugar production in the hope of getting better prices on the market. Thailand happens to be one of the world's leading exporters of sugar and this decision would be welcomed by Thai farmers.

The EU decision follows a World Trade Organization ruling in April that had deemed that EU's exports were excess to what was feasible and had demanded a change in the sugar support prices. However, this ruling is likely to be a major blow to sugar production in Ireland and Finland.

While other countries including those from the African block are unhappy over the decision, Australian Trade Minister Mark Vaile was pleased with it, "It takes a level of protection and unfair subsidy out of the system and so it makes the hard work of cane growers and sugar producers in Australia more worthwhile when they go to sell their product in the international market," he said yesterday.

The European Union has largely been blamed for the collapse of the Doha round of WTO negotiations because of the enormous agricultural subsidies provided to countries in this block.

This decision would considerably ease the pressure and the EU would be in a better position when the Hong Kong round of talks get underway next month, according to European Agriculture Minister Mariann Fischer Boel. Countries like Brazil, which is on top of the agriculture production list, are likely to reap rich rewards from this EU decision.

But poorer countries, mainly former colonies of the European superpowers are bound to be hit since they will lose the preferential status that they had enjoyed so far. "Our only hope is now to fight this in Hong Kong because the deal cannot progress at the expense to our countries," said George Bullen, who represents around 18 countries that were formerly European colonies. Most of these countries are from the African and the Caribbean block.