Back to website

Muckspreader 11 August

Private Eye - Aug 2004

“Sugar, Mr Speaker” was said to be the young Disraeli’s first attempt to address the Commons, on some long-forgotten row over the price of what was then Britain’s most costly import. His intervention prompted a howl of derision from fellow MPs, who would soon be crowding in to hear him as a leading orator of the day. Similar feats of oratory might be required to do justice to the latest manifestation of sugar’s power to make some rich while keeping others in poverty.

On August 4 the World Trade Organisation delivered a crushing verdict on a case brought before it concerning the illegal dumping of millions of tons of cut-price sugar on the world market by the EU. The EU is still dumping up to 5 million tons of sugar a year on the outside world, in flagrant breach of its agreement under the ‘Uruguay round’ to restrict its exports to one million tons.

This may all sound relatively innocuous until one looks at the damage it does to all those sugar-growing countries outside the EU which produce their sugar without subsidies. They see the world sugar price going through the floor, thanks to the rock-bottom prices EU countries can afford to charge because they have already made their profit out of huge subsidies from EU taxpayers.

According to Oxfam, the effect of this flood of illegal EU exports has been to slash world prices by 23 percent. In 2002 this led to exchange losses of 494 million dollars to Brazil, 151 million dollars to Thailand and 60 million dollars each to India and South Africa: £400 million stripped from the economies of these countries alone, quite apart from losses to other sugar-producing nations, mostly poor enough already.

Where this becomes an even greater scandal, however, lies in just why the EU is breaking international rules in this way. Easily the EU’s biggest sugar exporter is France, which produces 5 million tons a year from sugar beet, but only consumes 2 million tons. Three million tons is therefore over-produced, to be dumped on the world market. In addition France imports 1.6 million tons of cane sugar, mainly from its overseas territories in the West Indies which, because they are technically part of the EU, receive massive EU subsidies. This too is then re-exported, to add to the miseries of the Third World and the enrichment of France, which is thus responsible for almost all the EU’s export surplus.

This problem all came up before in 2001, when France’s answer to cutting illegal exports was that there should be savage reductions in EU quotas for countries like Britain, so that France could export her surplus inside the EU instead. Now the WTO has again confirmed that France’s exports are illegal – sorry, the EU’s – some version of this plan will doubtless be revived. As it happens, uniquely in the EU, Britain already makes a major contribution to helping third world producers by importing half her 3 million ton sugar consumption, unsubisdised, from the canefields of her former West Indian colonies. The other half comes from home-produced beet sugar, which, unlike France, the UK only produces to the limit of her EU quota. Any cut in quotas would have a devastating effect on the 7000 UK farmers who grow the stuff. But since EU trade policy is dictated by France, it is unlikely Brussels will worry too much if a few thousand of those UK farmers have to diversify into something else. The CAP, after all, has only ever had one real purpose - to protect the farmers of France.