The European Union's decision to cut sugar production quotas by 1.806 million tonnes is "out-of-order" because it will unleash a similar quantity onto the world market and depress prices, officials said.
They said that although the EU has the right to cut quotas, it is contrary to a recent World Trade Organisation (WTO) trade panel ruling against European sugar export subsidies following complaints from Brazil, Australia and Thailand.
"While there's no deadline to implement the WTO decision, the EU is under no obligation to fulfil it. But the move is absurd because it's against the spirit of the WTO ruling," Roberto de Carvalho Azevedo, head of trade disputes department at the foreign affairs ministry, said earlier this week.
The EU's final decision, including the implementation schedule is due on October 28. Brazil, Australia and Thailand requested a WTO debate on September 27 to discuss the EU's quota cut.
The influential Sao Paulo Cane Agroindustry Union (Unica) agreed with the government. "The EU decision jibes with current discussions about respecting the WTO panel ruling in reasonable time," said Fernando Moreira Ribeiro, Unica's secretary general.
With a large sugar surplus depressing prices, the EU converted 1.806 million tonnes of subsidised A and B Quota sugar into what it claims to be unsubsidised C quota sugar.