The sugar industry of Brazil has warned the 77 nations that make up the African, Caribbean and Pacific group not to support the European Union regarding the dispute over sugar subsidies.

The ACP - including Madagascar, Congo, Fiji, Guyana, Jamaica, Swaziland and others - said last week it wanted Australia and Brazil to withdraw the trade complaint against the EU after European Development Commissioner Poul Nielson said that the ACP arrangement would eventually have to end.

Australia and Brazil have filed complaints with the World Trade Organisation in Geneva. Officials representing both countries are due to meet with EU representatives at the end of November to try to agree on a resolution to the issue rather than proceeding to arbitration panel.

The ACP countries involved currently benefit from an agreement that sees them exporting 1.7 million tonnes of raw cane sugar to the EU every year with no, or very low, tariffs. This sugar then receives the EU's internal market price, far higher than the world market price.

Eduardo Pereira de Carvalho, president of the powerful Sao Paulo Cane Industry Union, is reported by Reuters as saying: "If the ACP insists on officially supporting the EU, we will ask our government to open a separate case against the EU's special sugar import regime for the ACP."

Carvalho said the WTO case will not address the ACP's preferential status, even though it violates GATT (the general agreement on trade and tariffs), the WTO's free trade agreement and the sentiment of the Most Favoured Nation clause.

He added that if the EU wanted to continue giving ACP nations aid through sugar quotas with preferential tariffs at a guaranteed price, the EU should cut domestic production and "stop dumping on the world market and driving down prices."