Simon Harris, director of corporate affairs for British Sugar, yesterday [Wednesday] told delegates at the International Sweetener Symposium that, though developing countries dominate the world sugar market, these countries are relatively immune to policy reforms in international trade agreements.
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Harris said: “Many developing countries are pushing in the Dohar Round (of the World Trade Organisation – WTO) to maintain their own support, while demanding developed countries cut theirs.”
Harris noted that developing countries account for about 75% of the world’s sugar production and exports, adding: “This is completely different to cereals – the model used for agricultural trade liberalisation – and means sugar should not be treated in the same manner.”
Harris pointed out that developing countries enjoy other policy advantages over developed country sugar producers, as well as lower environmental standards and exchange rate advantages.
“In the Uruguay Round (of the WTO), only half the developing countries cut their sugar import tariffs, while the rest were only willing to freeze their tariffs at high levels. Many developing countries have since raised their tariffs.”
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By GlobalDataHarris said many developing country support measures are not covered in the WTO, including “the use of financing measures, such as tax breaks, subsidised interest rates, direct bank lending, financial restructuring, and government debt waivers, and the use of ethanol cross-subsidies.” Harris noted that Brazil, the world’s largest sugar exporter, has built its industry on a government-subsidised sugarcane ethanol programme.
Harris cited a survey by the International Sugar Organisation that “developing countries both have much lower environmental standards and enforce them very much less rigorously than developed countries.”
Harris said that developing countries also employ “competitive depreciations,” reducing their currency values “to increase their international competitiveness.” He calculated, for example, that Brazil’s 118% devaluation of the real since 1997 effectively has raised the world market’s current 6.5-cent-per-pound price to 14.2 cents for Brazil. Harris noted that other major exporters, such as South Africa, Colombia, Thailand, and Australia have benefited from exchange depreciations in a range of 46% to 152%.
Harris concluded that “special and differential treatment” should not be accorded to developing countries in the world sugar market if the next WTO round is to have any significant effect on addressing the distortion of the world dump market for sugar.
