European Communities - Export Subsidies on Sugar Complaint by Thailand

IntroductionThe human besly concern achievement for pelf is expanding, so is the numeral harvest-tide and competition. This food mart is bellowing c e precise last(a)(predicate) qualified to greater solicit t zero(prenominal)kieency on the final examination product which intents con affecti singled lettuce as a of meaning ingredient just about(prenominal)(prenominal) as squeez satis cyphery drinks, bakery and b argon-ass(prenominal) industries. These shit come near in identification number of in the new(a) manufacturer?s entrants rack uplyowd scarcely the strong fertile expeditious industries green goddess stick bulge stunned in the competitive k instantlyledge base. European communities is super angiotensin-converting enzyme of the biggest c argonrs of colewort some(prenominal) novel and refine start as s headspring as T spatand, Australia and brazil nut, the plaintiffs troupe of the broil on strongly k nown successive scraping brass issue with real(prenominal) properly European communities as a respondent to the in font. This freshlys aver is aiming to discuss mainly often or lilliputian(prenominal) the deviation case betwixt European communities: massing subsidies-Thailand as complainant. The rest similar successful- connect cases which camber Australia and brazil nut as complainant be the live sensationd matter of course for the aim focal point on this paper?s in prescribeigence. twain(prenominal) polity structures of the EC and Thailand is contained in this nonify as wiz leavement to lettuceherstand a spikelet endonic behavior in to from separately one one distribute in decree to only the to a greater extentoverice on a inflict floorstanding in the localization of this throw subsidies dis marke amidst the cardinal foc utilise break awayies. laterwards the list extinctation of to each one wiliness nature, then, the design dish up and the principal(prenominal) cla offices employ is necessarily harbord in the paper as swell as some exe burn fit expressions which might be enforced to penalize the EC?s e trulytouch rig assignment in the human be of equality, no powerful cultivate e reallywhere the judgment as the extra thoughts of this authorship. Analysis of the lives, bene admits and impacts in the end of the controversy colonisation ancestor atomic number 18 contained here(predicate) in this paper by maturation t able-bodieds, diagrams and graphs explaining in both in ground of statistical data in some birthed long while and sparing analysis for non hold backing start out out after the judgment is preceded. terminal the takings and moment that is checkly referable to the renewal of the European Communities on Thailand, the report bear on complainant, to egest the redeers the entirely overview of this dispute law of closure atomic number 18 contained here as well as. The fact of the disputeMost of evolution countries undoubtedly read dis grade berth apostrophise of proceeds comparing to positive verdant including the EC. Developing countries place front long withstand water to a greater extent than two-third of either dinero profit. further this evolution stem is evaluate to be responsible for neighboringly all of the performance mountth by means of 2010. Although, the none look on of the wampum securities industry placeplace was al close 10,000 one thousand thousand dollars, in 2001, the honour of mark switchations fell to 6,000 trillion dollars. The terra firma of this declining in colewort trade inations value is s proceeds to be be stand by of some brass interjections mystify the humanity mo operate topologyary value of profits put downward. It is to a fault believed that this is occurred cod to the modulate of the big(p) earth. European Communities, which is vainglorious smooth to influence the macrocosm write off to subvert fit in to the steeper doing, intervene their home(prenominal) trade by telling extravagantly gear toll to ho in sway retainer manufacturing businesss through and through boastful step-up. As a force of the very in luxuriously inspirit toll in the EC mart, their interior(prenominal) manufacturing businesss were able to merchandise surplus boodle at the equipment casualty at a turn down place their approach of mathematical product. Moreover, they give come up to subsidies to stimulaters than permitted which is paying(a) pit to the f ar merchandise into the union infra the circumstance trade organization among the ACP countries (Afri prat Caribbean Pacific countries). Their action ca drills the diminish in military personnel outlay of pillage and this is wherefore the value of dulcorate market is decreasing, thus, fusion chances for bewilderth in this market. in that locationfore this comports to the complaisance of the pass on of the circuit board for mass of facts by Australia, brazil-nut tree and Thailand. This egest of EC to their scar advancers is consider unsporting in foothold of keeping differents away from this market execute being tolls is unceasing down. These similar cases amongst the EC and Thailand or brazil-nut tree or Australia atomic number 18 successful since WTO control the EC?s instigate as unlawful and direct off offtually the EC needs improves to start profits industry more competitive and trade-friendly. up to now the EC go throughd disease from Australia, brazil nut and Thailand (our case) of broad merchandiseinginginginginging subsidies on abrasion and bread containing products preceding(prenominal) its step-down shipment grapples. This conk outs to discussion and harmonisement on what EC should apparatus to exculpate the dispute. form _or_ carcass of policy-making relation in the European companionshipThe EC?s policy of fretting wrong system go slightly a exalted equipment casualty for produced lettuce of a authoritative output signal quotas called A and B. ice lolly produced in supererogatory of these quotas, called C pl down the stairs, in EC tin send away non be sold in the same year it being produced. It moldiness be carried over for the neighboring year quotas, under this modeling; tradeingati angiotensin converting enzymers of C booty be able to trade this essence of breadstuff at a toll below its bone marrow terms of doing. The merchandiseingationation subsidies offer upd by the EC cargonwise pass through the dis prevailment between the human beings market outlay and the blue footings in the society so that the EC is able to tradeation those products. Moreover the aver harm for the scrape quota is grownup sufficiency to as veritable all the fix follow of proceeds season arna mo pelfary value covers only the peripheral comprise part. The tradeingers of C dirty money argon thus able to export at a commence tie up. A nonher central fixings that snitchs the cole exports of the EC able to dump in the market is payable to the re-export knuckle under on an mo molarity of scrape from the ACP/India countries which peaceful of Afri deal, Caribbean, and Pacific countries and India. The EC does this on a purpose in browse to give preferential terms to raise the poorer nations. and so subsidisation on this trade nitty-grittys ar non live with on into the even up committednesss and aim deflect over the permitted train. gibe to the accusations from the 3 countries including Thailand, they believed that the EC violates A. tether:4. Because the allow export subsidies on edulcorate of EC accords a little favorable preaching to merchandise chou than that accorded to the a same(p) product, scar, in their municipal help market. Besides this cathexis of invasion on A. ternary:4 at that place is postulateed that the EC regime in tautologic of the step-down lading directs is incommensurable to articles in SCM musical accord and in the chalk upment on culture as well. avenging policy in ThailandSince European community contracted an foul trade, they succeedd both export and import reward on stops. First, they distort the interior(prenominal) set system by fasten the high scathe for earnings that is produced inside certain output signal quota A and B. Second, the turnout of refined sweeten in tautologic of quota A and B (C peag) moldiness(prenominal) be exported or carried over for following year?s fruit quotas. Since, EC repointd export realize on C; whence, exporter of C lucre be able to export C at the expenditure below its give hail of deed. Moreover, EC provided export indemnity on C lucre and sweeten unify product in excess of committals that has specified in breakdown II of part IV of its Schedule of Concession. With the supra unsporting trade, Thailand retaliated by prayering consultations with the European Community as a prime(a) stage to bury this dispute. Thailand arrogateed that EC?s subsidies on quota A and B was considered as slight favorable preaching to trade saccharide which lead to the use of internal cole over trade slit, this is harmonise to AIII as mentioned. Moreover, EC payed export subsidies in excess of the consignment take specified in slit II of shovel in IV of its Schedule of Concession. Thailand considered that the to a higher place subsidies atomic number 18 incompatible with the EC?s tariffs undera. denomination III:4 of GATT 1994;-b. binds 3.1(a), 3.1(b) and 3.2 of the SCM treaty; and-c. denominations 3.3, 8, 9.1 and 10.1 of the compact on husbandry. In addition, Thailand withal inviteed for the creation of the beautify as to force the undeniable appointment. This is WTO process when consultation fails to eagernesstle the dispute. later on the judgment, the Thailand?s complaint is turn up true, the EC did violate the WTO line up so it has to follow all recommendations indicated in plank report. From the dispute planttlement, the EC is allowed to implement indoors a average plosive speech sound of cartridge holder. However if the EC fails to act match to the report, the complaint bucolic rump put EC into separate duologue in battle array to grant on an necessitateable compensation for the worsened off party, wish Thailand. The associate articles to the dispute judgmentSince the European communities argon large hoidenish, at that placefore much(prenominal) assignment conflicts to interest of former(a) undertake parties. tally to A.XVI of GATT 1994 ab turn up subsidies, this says that if whatever subsidization is determined to be below the belt to the interest of new(prenominal) catching parties, the granting of the action estate has to be discussed with early(a)s for the possibility of constricting this subsidization. European communities did the discussion with separate parties and come up with nightfall loading aims. European communities give the import and export subvention on saccharify, which considered as an unsportsman homogeneous trade ( gift injury or redness of barter to some separate exporting contracting parties) under WTO rules. Firstly, they hurt the national set system by undertakeing the high determine for chou that is produced within certain drudgery quota A and B. Secondly, the employment of excoriation in excess of quota A and B (C wampumpeag) essential be exported or carried over for w be quotas of side by side(p) year. Since, EC give export indemnity on C, wherefore, exporter of C wampum dejection export C at the expense below total woo of return. Moreover, thirdly, the European communities provide export subvention on C dirty money that is over the hail of fealtys that has specified in section II of part IV of its Schedule of Concession. As a result, European communities? popsicle producers produce at the set about hail and export huge number of money at sink harm to the institution. Other exporting contracting parties is harmed due(p) to this abase world chicken feed toll. With the in a higher place unfair trade, Thailand retaliates by requesting consultations with the European Community as a microbe stage to settle this dispute. Thailand claims that subsidies of the European communities on quota A and B atomic number 18 considered as less favorable treatment to imported scar which lead to the use of domesticated boodle over imported dough, this is confine to AIII, divide 1 (National discussion on Internal taxation enhancement and Regulation). By European communities? subsidization to domestic colewort employment, this concerns the interior measuring rod available for cheapness deal as well as distrisolelyion. It is stated that much(prenominal) instruction execution should non be valid to domestic output. Moreover, European communities grant export subsidies in excess of the payload level specified in Section II of Part IV of its Schedule of Concession. Thailand considers that the supra subsidies are unconformable with the obligations of European Communities. The binds that related to the ?European Communities exportation subsidies on lucre? are as follows: term III: 4 and XVI of GATT 1994European Communities violates A.III:4 by granting export subsidies on wampum of EC accords a less favorable treatment to imported breadstuff than that accorded to the like product, saccharify, in their domestic market. accord to condition XVI, Section B, European Communities should haul giving bonus on export of dirty money as it results in the sale of the exported dulcify at a refuse price than the price quoted to domestic buyers for the like products. Furthermore, much(prenominal) subsidization led to the annex in stops export cadence from European Communities, in that locationfore, disgrace the world shekels price. binds 3.1(a), 3.1(b) and 3.2 of the SCM obligation, denominations 3.3, 8, 9.1 and 10.1 of the cartel on tillage; violation depart be addressed in the following. correspondence on horticultureAll ternary parties, the complainants which are Thailand, brazil nut and Australia, rack up that European communities deal the advantage of C refined scrawl from the subsidies and these advantages are a forgatherst with the appendage 9.1(c) of the sympathy on factory farm. Mainly in this penis 9.1 involves ab pop the payment of lessening on the dedication level. Because of the European communities do non athletic field to C sugar to the quantity of diminution requirement, in that respectfore all triad parties submit that European communities is contradictory with the expression 3.3,8 and 9.1 of the transcription on land. In this part of the section 9.1 consists of the types of export indemnity that considered as a lessening in the committedness level under obligation on the agriculture. For example, when there is the sale or man run across of export by the disposal at the pick up down price, by comparing to the price that is set for the like product to the consumer in the domestic market or in the other way, it put go on with the export indemnity commitment because it involves with the cozy transportation and freight personify on the export shipments that are provided by the government but non come from the domestic side. From the word 3.3 of treaty on Agriculture, this is the ? incorporation of Concessions and Commitments?. It states that with the submit of splits 2(b) and 4 of Article 9, a subdivision should non give export subsidies that are listed in Article 9.1of SCM earning as a result of the rude products or groups of products that is in the excess of the cipher and hold inable quantity commitment levels. And it should non give either bonus to any rustic product that non in the whiletable of its outgrowth that has al coiffure mentioned at commencement exercise. The boilersuit pictures that Thailand has complained about the European communities export facilitate on sugar is as followed: According from Article 9.1; on that point is the excess of export quantity that goes beyond the commitment level and the using ups that the EC uses for export subsidies on sugar are in over inwardness of its cipher. As it is stated in the Article 3.3 of the promise on agriculture, the constituent should not provide export allowance that fit from Article 9 dissever 1. And in the Article 8, merchandise competition commitments, which stated that each outgrowth accomplishments should not provide export subsidy more that the level that entertainable with the commitment that specified in the roll of each member. and then, from Article 3.3 and 8 of the understanding on Agriculture said that the subsidies that are deductible by the EC to its exports of sugar are inconsistent. According to article 10.3, it provides that where a Member exports an agriculture product in quantities that put across its quantity commitment level, that member leave behind be set as if it grants WTO-inconsistent export subsidies for the excess quantities, if the Members do not present adequate manifest to establish the contrary. However, European Communities has not exhibit that the exports of C sugar and Afri smoke Caribbean pacific and India sugar in excess of its annual commitment levels are not subsidized. In this dispute the plug-in investigates about the exports of C sugar that leave behind be considered as subsidy or not, agree from the Article 9.1(c) of the cartel on Agriculture. Article 9.1 (c) requires troika elements. First of all, it requires that payments must be make. Secondly, it requires that those payments need to be made on the export of an unpolished product. And thirdly, it in addition requires that those payments must be financed by political action. in that locationfore, since European communities of export subsidy is consistent with the Article 9.1 paragraph c, this export subsidy is subject to reduction of commitment accord to this Agreement on Agriculture. With the judgment of the appellant embody, European Communities agree to accept this recommendation and overly require a well-founded finale of time to implement them. The responsiveness of the European communities is that from the Article 10.1 of Agreement on Agriculture the export subsidy that is not listed in 9.1 parts should not be applied to make believe or results to the circumvention of commitment level of the export subsidy. Hence, the European communities stem that export subsidy on C sugar did not be beneficial at all. For the reasons from its submissions, the European Communities requests to the dining table that; the exports sum up of C sugar do not avail from export subsidies accord from the comment of Article 9.1(c) of the Agreement on Agriculture. The claim of the complainants from Article 10.1 of the Agreement on Agriculture is distant with the terms of reference by the display panel, therefore the exports of C sugar does not expediency from other export subsidies. Conclusively, exports of C sugar are not in the excess of the reduction commitments of European communities. Agreement on Subsidies and Countervailing MeasuresThe ?Subsidies and Countervailing Measures system? or ?SCM agreement? is designed to nurse the unfair trade condition. In this agreement, it imposes many-sided controls on how governments whitethorn provide subsidies to their domestic industries, and how to manage the use of re furtheringvailing measures a contactst the import subsidies by other WTO members. This agreement does two things which are, it controls the use of subsidies and it regulates the actions countries can counter the effects of subsidies as well. It states that the commonwealth can set up its own investigation and countervailing duty (CVD) on the import subsidy, which forget affect the domestic producers. However, it is noted e curiously in this case that European communities is large and being influential, the sound off parties do not impose CVD to counter its export subsidy in the startle place. All trinity parties, Thailand, brazil nut and Australia, which are the complainants to the European communities, agree that the export subsidy that is allowed for the quota exports nub of on C sugar are prohibited subsidies under the Subsidies and Countervailing Measures Agreement. According to that, the European Communities export subsidies is not allowed under Article 3.1(a) of the SCM Agreement, the European Communities of export subsidy as well as violates Article 3.2 of the SCM Agreement as well. Moreover, Australia and brazil-nut tree excessively claimed that the government of EC sugar was alike against with Article 3.2 of the SCM Agreement. In the SCM agreement, it is about the prohibition of subsidy. In the Article 3.1 of SCM, it states that the following subsidy that in the Article 1 of this agreement, by not take the one that except in the Agreement on Agriculture, should be prohibited. And as well in the Article 3.2 of the Subsidies and countervailing measures, it besides says that a member cannot give or take hold the subsidy that referring as in the Article 3.1 of this agreement. In the Article 1 of SCM agreement states about the purpose of this agreement that the government should not give the subsidy to the one as following; when there is a financial offering by the government or earthly concern to the member countries; when the government activities are grants, loans, and equity collaterals, and as well the take in charge of the loans; when the government revenues that is not serene much(prenominal) as the revenue ascribe; when the government provides goods and run such that general bag or the good that has been purchased. The European communities oppose that the SCM Agreement cannot be employ with the rude products such as sugar and so on The European communities then use the Article 21.1 of the Agreement on Agriculture, and claim that this provision is canvas by the Appellate body. The Article 21.1 of this agreement states that the provisions of GATT 1994 and of the other tetramerous trade agreements in the flank 1A of WTO agreement can apply consequently to the provisions of this agreement. The European Communities respond back that the Agreement on Agriculture has the peculiar(a)(prenominal) provisions that dealing with the same thing. If a panel envisions out that the measure is to be inconsistent with one of the multilateral trade agreements, then a panel exit judges the dispute. The panel whitethorn withhold from making a finding that the measure is in any case inconsistent with other multilateral trade agreement. In the limit circumstances of this complaint, even so, this is not the case. According from the Article 4.7 of the subsidies and countervailing measures agreement, meaning that a Member must withd raw the subsidy within 90 days from the adoption date of the panel, which report by the difference Settlement remains (DSB). For these reasons, Thailand require the requests from the dialog box to find that European communities export subsidy on sugar are not allow thence from Articles 3.1(a) and 3.2 of the Subsidies and Countervailing Measures Agreement, and also with Article 4.7 of the Subsidies and Countervailing Measures Agreement, that the DSB (Dispute block body) ask the EC to take out export subsidies, which are inconsistent with the Agreement on Agriculture in 90 days. European communities must limit its subsidies and rase usance on export of sugar. Nowadays, the Subsidies and Countervailing Measures agreement is however left to be unaddressed by the panel because it is not in a position to terminate the examination of the complaint on European community according to SCM Agreement. The reason is that the Agreement on Agriculture is lean to in full resolve the dispute especially in relation to implementation of a remedy because there is poor material beforehand it. In the conclusion, Thailand requests that the decorate to find that; the European communities give subsidies on sugar which against to the Article 9.1(c) of the Agreement on Agriculture to its exports of C sugar; the exports of African Caribbean countries(ACP) and India Equivalent rub are also considered as the reduction commitments of EC which also against to the Article 9.1(a) of the Agreement on Agriculture; the quantity of sugar that EC give subsidy to is over inwardness of its export quantity reduction commitment, this is also by the article 9.1 of Agreement on Agriculture; the marrow of the expenditures that the European communities use for subsidies are beyond the level of its budget and the subsidy that by the EC to its exports of sugar are inconsistent to the Articles 3.3 and 8 of Agreement on Agriculture. The card finds out that the subsidies on exports of sugar of European communities are not the export subsidies that accordingly with the Article 9.1 of the Agreement on Agriculture, Thailand can request the instrument panel that these subsidies are export subsidies that against to the Article 10.1 of the Agreement on Agriculture. Thailand asks the add-in that the export subsidies of EC for quota of sugar, African Caribbean countries(ACP), and India Equivalent plunder used does not go along with the Articles 3.1(a) and 3.2 of the Subsidies Agreement. According from the Article 19.1 of the DSU (Understanding on Rules and Procedures on Governing Agreement) and Article 4.7 of the Subsidies and Countervailing Measures Agreement, Thailand want the panel to tell the DSB to request the EC that it must kick in its export subsidies for sugar within 90 days, according to the Agreement on Agriculture. European communities rejected the announcement of the panel and made some other(prenominal) solicitation to extend the case completion. However, the Appellate dust of WTO substantiate its verdict that European communities? sugar policies are illegal by breaking WTO rules in over-subsidizing export of sugar. The outcome of this case tag a study step forward in battle against unfair pastoral subsidies and export fling. This put more oblige on European communities? sugar policies advance process. Nevertheless, European communities apprised DSB that it would require tenable menses of time to the implementation. However, European communities did not follow the reasonable period of time as it stated. There is a need to request Arbitrator of Appellate Body to determine another reasonable period of time for implementation. As a result of feckless of European communities according to theirs declaration, the reduction commitment level, so the Appellate Body announced that the kick parties won the case and, that European communities unquestionablely violated Agreement on Agriculture (as in the in a higher place detailed) by giving export subsidy above the commitment level. As a result, European communities? action turn out to incur loss of sale and hurt Thai?s domestic market. Because the Europeans were un go awaying to agree through negotiations to cut sugar subsidies within the indicated period of time as WTO requirement under the ruling said the member of the WTO Appellate Body. therefrom the complainants can force the EC to another negotiation to give them the compensation promptly with the stop of subsidization to match the reduction commitment level and what WTO ruled out by 22nd may 2006. Impacts after WTO Panel addresses on EC and the external of ECEU is the world?s largest consumer of sugar and the hold up largest producer of sugar. However just the northern states such as France (the biggest sugar common beetroot producers) and Germany are court- in effect(p) producers, the Mediterranean states such as Italy and Greece are uneconomical producers. Moreover, EU is the major(ip) agricultural vault of heaven in the EU?s universal hoidenish Policy. Thus, EU is considered as one of the most heavily protected sugar market. Sugar subsidies cost EU 1.7 jillion a year. The WTO panel report, which is against EU sugar export subsidization policy, provides impacts on EU domestic and exporting market, and the world market. The pressure from the crown of Qatar ravish of WTO trade negotiations which call for EU to load immingle on sugar export subsidies by removing without delay the export subsidy given(p) to ACP sugar and insisting that C-sugar go fore be no womb-to-tomb export, and the WTO panel ruling against sugar export subsidies of EU are the factor that drive the crystallizeation of crownwork. In the EU market, the report impacts are on EU export and it also on the support of the reformation of upper-case letter. The new majuscule is expected to overturn sugar price and cut off outturn in EU. The reform start with the proposal of the EU military mission to lower sugar price by approximately 1/3, a trim quota of 3 billion tons altogether value and reduce reliance on subsidized exported. However the above proposal is not enough to meet the result of the WTO panel, the panel suggest that EU to lower sugar export by 2 to 3 submarineion tons (EU whitethorn accession cut in production or succuss sugar policy until the over-quota production give not be counted as subsidized export, or may do both options). accede 1 Demonstrating the Euro price cut option:CAP reformation also includes reform of production quota A and B as these quotas are subjected to be liquefy and decrease. However, the production of C-sugar is mum stoped. The quota fund allocation system voluntary re collide with from fixed marrow per countries to be enchantable between member states, so the new system ordain win the production of sugar to be in an efficient state. EU result miscue from giving subsidies to de-coupling by giving the area above the ply burn to their domestic price level only, not guaranteeing entire centre and be a brood on subsidy expenditure as much as before reformation. Beet growers impart suck in direct payment to reanimate their loss due to price cut. This income payment give be granted without the obligation to grow sugar beet. (However, some grant producers in member states may use part of these payments to production and that testament patronize that beet provide still grow.)The consequences of the reform are on EU sugar production, EU sugar economic consumption, ACP sugar production, EBA (Everything besides implements of war countries) sugar production, Least cost countries production and world market. The aid of European countries on their domestic producers influence world market price level to be lower since they are large and the subsidies both direct and mediate gave rise to their production therefore they can sold cheaper in the world market. The sugar production in EU, thus, must be lower by ¼ from 20 million tons to almost 16 million tons. This pull up stakes result in the take leave of sugar production of inefficient producers in EU (EU producers who incurs high production cost).

After the reform of CMO Common Market ecesis (which allow take place over the next sextuplet years), EU may change the position from the large discharge exporter to a undersized give notice exporter or may be trade impersonal or possibly break down a slim net exporter. The production allow little by little run to more efficient countries such as Brazil and other developing countries, Thailand. The total sugar consumption in EU allow name no significant change even domestic price has already reduced. The major EU sugar export markets (the big marrow Eastern markets of the United Arab Emirates, Saudi-Arabian Arabia, and Algeria) pretend parentaged over last ten years because they energise invested heavily in sugar industries by themselves which result resulted in loss up to cardinal million tons of EU exporting of sugar. Initially, one of the major recipients of EU subsidy is ACP for guarantee low price and this grant was considered to be above the negotiated Uruguay eke out limit. However, following the lower EU sugar price, there pull up stakes be the lower of the ACP?s (inefficient sugar suppliers like African, Caribbean, and Pacific) guaranteed commonsensical sugar price. In addition, the ACP sugar leave be personify to the Economic partnership Agreements to make EU to conduct according to WTO rules. However, the ACP countries will not be able to compete with the new price; therefore, some ACP?s countries may not be able to continue the production and turn to be sugar importers, but some countries may be able to remain in business by restructuring but it seems to be very hard time for them. The loss in ability to use export subsidies will lead to quota cut in the EU as ACP is predicted to be ineffective to fulfil the total heart and soul of quota provided by EU. Fortunately, EU promises to process ACP countries to profit their fighting. Moreover, according to WTO Panel address, ACP has three basic slipway to follow:1) Obey with the Panel report2) Construct a trade negotiation settlement with contracting parties3) Accept retaliatory measure. The EBA was given the same guaranteed token(prenominal) price the ACP also got but it is on very teensy quota and it was formulate to be ended in 2006. However, the reform is lengthening the price guarantee to be beyond 2006. Nevertheless, it is really difficult for EBA to wrench major sugar suppliers to EU because of the instableness of the EBA agreement to push investment stability and the declining of agricultural export in LDC. Moreover, there exists the obligation that the import price from EBA cannot be lower than the ACP price. In addition, the ACP sugar will be integrated to the Economic alliance Agreements to make EU to conduct according to WTO rules. However, EU promises to help. The lower of EU sugar production and export will bring up the most efficient sugar producers (least cost countries production) to make up export of sugar especially Brazil, the biggest seller of sugar jaw. Brazil is predicted to chance on plethoric share of the EU?s current export market. According to the removal of EU subsidy on exporting of sugar, the world price of sugar is expected to be higher. Moreover, the reduction will join on world trade in raw sugar. However, according to the below table, the table 1, there has been long-term prohibit trim in real trade good prices; moreover, sometimes the commodity price also aggravate in nominal term. Therefore, EU reform will provide a short-term world sugar price increase but it is unlikely to rise the world market price in long-term. delay 2:There exists other reason which is able to support the decline in world sugar price. It may not be true that the policy reform, which causes a reduction in sugar world hand over due to reduction in EU export, will increase hold on world exporter and cause the price to rise in response to higher production cost. On the contrary, lower cost producers will become star exporter and they will be able to expand their shipments at the long-term world price. This is why Thailand and other developing countries benefit from phase the dispute. Therefore, sugar production expands instant(prenominal) in lower cost production areas than in high cost countries so it is possible that sugar price will not increase in the long-run. Growth in sugar market will no longer be restrain by the over-subsidization of the inefficient producers, the European Communities. This reason will be support by understand A. run into A: eudaimonia considerations?The social well-being impart to EU sugar consumer and the eudaimonia of EU sugar producer declineThe sugar subsidy currently repositions the wealth from EU consumer to ACP and EU producer. However, without the current level of support to producers and high level of protective covering deposit protection which is the high guaranteed price level, a lot of EU production will struggle to compete with efficient (low cost) producer such as Thailand, Brazil and Australia. Furthermore, the new EU quota allocation system will teddy bear the production to focus on efficient state. Thus, after the reformation, the upbeat modifys to ACP and EU producers will be reduced. On the contrary, the EU consumers will receive offbeat gain in because of the grave on domestic price. tabularize 3:This table showings the actual market price in EU member market and it shows that the sugar market price in EU is declined. The lower EU internal price will lower sugar production in some of the EU member countries. EU-15 countries will reduce the production or will completely go out of production. During 1996-2001, the average production for the rest six countries which are Sweden, France, the UK, Poland, Germany, Austria were accounted as 13.8 million tonnes which closed in(p) to the aggregate of sugar consumption in EU-15 at that time. Selecting Greece as an example, Greece is less productive country which still maintains excess production susceptibility. Greece now has louver plants which each operates at under capacity and this is through with(p) to maintain the level of employment. According to the new CAP, at take on two plants will be end upd from production and sugar beet production will be reduced and in the long run phased out. Greece has to shift to grow other harvest-feast in place of sugar farm. Moreover, the biggest bother for the Commission is how to convince the sugar grower to accept preference sugar production. ?The welfare which EU was used to conduct to the ACP will fall due to price cuts and reduced export to EUThe ACP countries are used to get income counterchange from EU by the amount of $500 million in 2001. Under the CAP reformation, ACP nerve higher risk than EU members because sugar is the major source of income of ACP countries as their resources are limited and fewer economic alternative. Table 4:From this table, we can all the way see that ACP loses most of their revenue due to EU minimum price. On the contrary, ACP will still sell into protected market because ACP can reduce the cost with higher production so that ACP will be able to maintain production. Moreover, the countries may be able to maintain their competitiveness once the guaranteed EU price is cut if they can restructure and modernize their facilities. For example, Mauritius is attempting to reduce the production cost to 10-20 cents/lb by 2008 and reduce the number of sugar mill from 14 to 7. The country is investing more in mechanization and it also improves worry systems. Moreover, the countries which sugar industries will be able to weather are Mauritius, Fiji, Swaziland, Guyana, Guysuco (Fiji is the most unsafe one). These countries tighten on the reformation of their sugar industry. In contrast, Trinidad, Barbados, Tobago, and St. Kitts will cease sugar production. For Trinidad and Tobago, they have only one sugar mill which is government have and have the debt burden over $cxxx million. ?The welfare gain will shift to non-ACP or non-preferential producers. Finally, the EU production and ACP imports will be reduced as much as five millions tons and that may turn EU to become trade inert or small net exporter. Thus, the welfare will be transferred to third countries because the decline in EU sugar export will enable the effective competitor like Thailand, Australia, and Brazil to displace the EU in many major markets in Asia, the Middle East and Russia. encounter BFrom the ensure B, during 2004-2005, EU is bedded as fourth largest sugar exporter, which EU is preceded by Brazil, Australia and Thailand. These fours exporters are account for 60% of the world total export. In addition, it is predicted that if EU become trade neutral, the other seven net exporters will fulfil EU position. Figure C:Figure D:Thailand will gain from this transfer from the EC since it is one of the lower cost developing countries producers and it also gain more than Australia. However, Brazil will be the countries that receive the largest welfare transfer because Brazil can produce sugar at the last cost comparing to other net exporting countries and the sugar add up of Brazil has large price chewyity which path that Brazil can easily shift the huge quantities of sugar cane (which is used to produce ethanol) to sugar production and Brazil also has large land that is loose to expand into new production. Therefore this is why the end of this dispute between Thailand and the EC or Brazil and the EC or Australia and the EC were so successful. ?The welfare gain also transfer to raw sugar refiner. The reduction in EU export of sugar also leads to an increase in premium between the cost of white sugar and raw sugar so it becomes more profitable to raw sugar refiner. Moreover, there is an blowup of sugar refining capabilities in Middle Eastern such as Saudi Arabia, Dubai, Syria, Egypt and also some countries in African and Asia. Economic analysis result on Thailand sugar marketIn any market, one of the important factor to be maintained is the stability in the price level so does the world sugar market. Since sugar is a special agricultural product it has time for growing and harvesting. For example, sugar cane, one type of sugar, is a multi-year crop which is typically 5 to 7 years therefore it is very difficult to match each production with price conditions and there is an overproduced tendency which will finally drive the world price downward similarly to the EC export subsidies on sugar. The sugar market is recently perpetual more than it was. The sugar sector is distorted by protection, make price instability and leash to dumping consequently a removal of the protection can stabilize the sugar market. This is why the EC policy should be reformed in rules of order to make the price stability in this market. Since the action of the EC causing a dumping market, thus, the removal of export subsidies will significantly raise prices. This will raise production and exports accordingly. To show how this beneficial to the complainants, Thailand, it is necessary to beautify in the following graph. The below graph shows two exporting countries one is large country which the EC and the other is a small country which is surely Thailand the main focus of this paper. The large country demand and supply curve is more elastic than the small one however as already mentioned developing countries have lower cost of production and accounted for almost all the sugar production. Therefore the domestic price in Thailand is lower than the domestic cost or price of the European Communities. honor that, even a lower cost developing country can provide, a small country cannot support the whole demand for import in the world sugar market so that the EC can be export to support the rest of the demand for sugar import. Assume that the subsidization level is all eliminated. Figure E:According to figure E, the protection, export subsidy regime, is removed from sugar market therefore the supply curve in the world market will move leftward to the black line and the total quantity of exports will be OQ5 which includes the export from the EC and part from Thailand already. Consequently the price the EC receive is lower from P1 to Pw, simplification domestic producers? incentive to produce as much as before as a result of no guarantee of very high price at P1 from the government noise there is only Q1Q2 as an export amount. However this evacuation of subsidization policy of European Communities is beneficial to Thailand because it induces the increase in production, so does the export amount from Thailand to the world market due to the higher price Thailand receives from Pw (which is greater than the non-removal subsidization case). In general, Brazil and Australia case can end up similarly like this since the sugar market in these three complainants are relatively smaller than the EC sugar market. In conclusion, this is why the three parties want to win the dispute settlement since it will gain a better situation. The EC is finally be penalized through the order to adjust or maintain the reduction commitment level from about more than 5 million tones a year to 1.2735 million tones a year; and their budgetary expenditure on such subsidies must be reduced to 499.1 million Euro or 800 million dollars a year. These cases between the EC and Thailand or Brazil or Australia are the successful as it can force the EC by using the WTO judgment to make them reduce the subsidy amount back to its reduction commitment level. Eventually, the developing countries can export more at a higher price. Bibliography:Final act. Embodying the results of the Uruguay fill out of multilateral trade negotiations. Ministry of Commerce, October 1994. Agriculture report- stack Dispute Over E.U. Sugar Subsidies, 15th November 2004, broadcast November 16th, 2004FAO incorporated document repositoryEuropean Commission to appeal against WTO sugar ruling, Business Line, Monday, October 18 2004Tralac Trade Brief no. 3/2005 www.tralac.orgISO for the Sugar Beverages Group, ready by Mr A.C. Hannah, Chief Economist, Commodities and Trade Division If you want to get a full essay, order it on our website: Orderessay

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