Brazil and other low-cost sugar manufacturers will benefit from a planned overhaul of Europe's sugar policy at the expense of the world's poorest states, a group of Third World producers said on Tuesday.
This month, the European Commission proposed an overhaul of EU sugar policy, recommending huge price cuts for a regime barely changed in 35 years. Overall EU sugar production would also fall, as would subsidised exports.
The reform aims to slash internal EU sugar prices by around 40 percent. At present, the lavish support system keeps EU prices at more than three times the world market.
Such a drastic cut, say a group of 27 least developed countries (LDCs) that produce sugar, would spell disaster for nations that were hoping to enjoy high prices and more duty-free access to Europe under the Everything But Arms (EBA) initiative.
"The world's poorest countries have been picked again to be the losers, to the benefit of the world's largest and lowest cost producers," the LDC Brussels Sugar Group said.
"The real winners will be the international sugar power houses, such as Brazil, that will quickly use their extremely low production costs to fill the upcoming production gaps in the EU, before the LDCs have even been able enjoy their duty-free access," it said in a statement.
EBA was adopted in September 2000 to liberalise EU imports of all products, except arms, from poor countries. Sugar imports are likely to rise by 15 percent a year until 2008/09 from an initial quantity in 2001/02 of 74,185 tonnes.
Full liberalisation will not come into effect until 2009/10.
Under EBA, least developed producers such as Burundi, Nepal and Somalia would finally receive full duty-free access to the high price levels of the European sugar market by 2006-2009, the LDC group said.
This access would have allowed their industries to generate enough return to attract the investments needed to upgrade their facilities - but not at prices sharply lower than now.
EU member states are now discussing the Commission's proposal, which calls for the changes to start in July 2005, one year before current policy expires. So far, most of the bloc's 25 countries want reform to begin in 2006, at the very earliest.
"If the Commission's proposal is approved...the LDC sugar producers in 2006 will finally see the opening of the door to the European sugar market - only to find out that most of the benefits are gone by then," the statement said.
"The real winners outside of the EU will unfortunately not be the LDCs that could use the support of the EU to strengthen one of the few really competitive export industries they have."
The African, Caribbean and Pacific (ACP) group of former European colonies benefit from special preferential deals for sending duty-free sugar to EU - and are also very concerned about losing export revenue as a result of the reform plan.
Discussions between ACP and European Commission officials are likely to begin after the mid-year European break on possible compensation and renegotiation of the individual trade deals.
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