The European Union approved the export of 700,000 tons of “out-of-quota” sugar from Dec. 1, drawing an angry reaction from producers in Australia and Brazil, who accused the bloc of breaching its trade commitments.
The EU approved the exports, along with the sale of 400,000 tons of out-of-quota sugar for food use within the bloc at a reduced levy and the opening of a tendering system for sugar imports from all non-EU countries at reduced duties.
The approval of additional exports of out-of-quota sugar followed a decision in March to export 650,000 tonnes from Jan. 1, 2012, which the Commission said took the total volume of EU exports in the 2011/12 season to 1.35 million tonnes.
That is the maximum volume of out-of-quota exports the EU is permitted each marketing year under a World Trade Organization (WTO) agreement.
But sugar producers in Brazil and Australia accused the EU of exceeding its WTO limit for 2011/12, because in April it had approved the export of 700,000 tonnes of out-of-quota sugar for delivery between Sept. 1 and the end of 2011—most of which falls in the current marketing year.
“This will take the total amount of its exports in 2011-12 (Oct-Sep) to 2.05 million tonnes, exceeding its WTO export commitment by more than 65 percent,” Alf Cristaudo, chairman of the Australian Sugar Industry Alliance, said in a statement.
The Brazilian Sugarcane Industry Association also criticised the EU’s move.
“The EU cannot decide that suddenly the marketing year is 15 months instead of 12, it’s totally illegal to do this,” the head of international affairs at the Brazilian association, Geraldine Kutas, told Reuters.
The EU would most likely face questions on its decision from other major sugar producing nations at the WTO, Kutas said.
An EU official said on Thursday that the exports approved in April had come out of the bloc’s unused WTO export quota for 2010/11.
Australia, Brazil and Thailand complained that the EU breached its WTO commitments last year, after the bloc exceeded its export limit for 2009/10 by nearly 600,000 tonnes.
Out-of-quota sugar refers to EU sweetener produced in excess of national production quotas, and is mostly either exported up to the bloc’s annual WTO limit or sold for biofuel production and other industrial uses.
New Imports, Sales
The EU’s sugar management committee also approved on Thursday the sale of 400,000 tonnes of out-of-quota sugar for food use at a reduced levy of 85 euros per tonne, instead of the usual 500 euros per ton.
Producers would apply to sell their excess sugar in application periods running from December until Feb. 15, and from June 6 to July 11, with a maximum limit per application of 50,000 tons.
In addition, the Commission said it had itself approved the opening of a tendering system for sugar imports from all non-EU countries at reduced duties.
The tenders, which chiefly concern raw cane sugar, will be held according to the same timetable as the out-of-quota sugar sales.
The Commission took that decision after EU government officials in the management committee failed to reach a majority either for or against the proposal, a spokesman for the EU’s executive Commission said.
“These proposals are designed as the most efficient measures to secure additional quantities for the domestic market, by both facilitating imports and taking advantage of the abundance of the out-of-quota harvest within the EU,” the spokesman said in a statement.
In the first three import tenders scheduled in December, only full time EU refiners will be allowed to bid to import raw cane sugar for refining, the Commission said. All operators will then be able to bid to import raw cane in the tenders schedule for 2012.
Operators must submit bids to import volumes between 20 tonnes and 45,000 tonnes, specifying the level of reduced import duty they would be prepared to pay.
The EU normally applies duties of 339 euros per tonne on raw cane sugar for refining from major suppliers Brazil, Australia and Thailand.