# EUR-Lex - 52005IP0079 - EN

Important legal notice

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# 52005IP0079

**European Parliament resolution on the forthcoming reform of the common organisation of the market in sugar **

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Official Journal 320 E , 15/12/2005 P. 0271 - 0276 *

P6_TA(2005)0079

Reform of the common organisation of the market in sugar

European Parliament resolution on the forthcoming reform of the common organisation of the market in sugar

The European Parliament,

- having regard to Council Regulation (EC) No 1260/2001 of 19 June 2001 on the common organisation of the markets in the sugar sector [1],

- having regard to the Commission communications to the Council and Parliament on accomplishing a sustainable agricultural model for Europe and, in particular, reform of the sugar sector (COM(2003)0554 [2] and COM(2004)0499),

- having regard to the extended impact assessment on the options for reform of the Community sugar regime (SEC(2003)1022),

- having regard to the negotiations with the ACP States referred to in Protocol No 3 on ACP sugar of Annex V to the ACP-EP Partnership Agreement [3], the special tariff quota in favour of India referred to in Council Decision 2001/870/EC of 3 December 2001 on the conclusion of the agreements in the form of an exchange of letters between the European Community and the Republic of India [4], Regulation (EC) No 2501/2001 on the Community scheme of generalised tariff preferences [5] and Regulation (EC) No 416/2001 on the extension of duty-free access without any quantitative restrictions to products originating in the least developed countries (LDCs) [6],

- having regard to the ACP-EU Joint Parliamentary Assembly's resolutions on sugar of 1 November 2001 [7] and 21 March 2002 [8],

- having regard to Council Regulation (EC) No 2007/2000 of 18 September 2000 introducing exceptional trade measures for countries and territories participating in or linked to the European Union's Stabilisation and Association process [9],

- having regard to Council Regulation (EC) No 2563/2000 of 20 November 2000 amending Regulation (EC) No 2007/2000 by extending to the Former Yugoslav Republic of Macedonia and the Federal Republic of Yugoslavia the exceptional trade measures for countries and territories participating in or linked to the European Union's stabilisation and association process [10],

- having regard to the reform of the Generalized System of Preferences proposed by the Commission (COM(2004)0461 [11] and COM(2004)0699 [12]),

- having regard to Article 299(2) of the EC Treaty,

- having regard to Rule 108(5) of its Rules of Procedure,

A. whereas the commitments entered into by the European Union within the framework of the Doha round require a reduction in customs duties and a reduction in production and export support measures; whereas these commitments and the need for the entire sector to be brought up to date and made more competitive necessitate reform of the common organisation of the market in sugar,

B. whereas the outcome of the appeal against the WTO panel ruling will influence the level of quota cuts, making it necessary to consider the future of C sugar,

C. whereas, under the preferential agreements with the ACP countries and India, the European Union is committed to importing a fixed quantity of sugar from those countries at guaranteed prices,

D. whereas the "Everything but Arms" (EBA) initiative, if it is applied as it stands, will result in a massive influx of sugar onto the European market, in particular through illegal triangular trade whereby sugar purchased in advance at the world market price is re-exported to Europe; whereas it is virtually impossible to detect transactions of this kind and whereas such imports put the coherence and even the very balance of the common organisation of the market at risk; whereas, at the same time, such fraud is damaging to European taxpayers,

E. whereas, although the EBA initiative is generous in its objectives, it does not provide the LDCs with any assurance of economic and social development since the likely increase in triangular trade will benefit only those third countries which are already competitive; whereas it is economically misleading in relation to sugar as, in future, any rise in exports of LDC sugar to Europe will bring the European price down, which is against the interests of the LDCs,

F. whereas, consequently, the LDCs are calling for new rules for the EBA initiative and whereas the multiannual generalised system of preferences expires on 31 December 2005,

G. whereas Regulations (EC) No 2007/2000 and No 2563/2000, which provided free and unrestricted access to the European Union's sugar market for the West Balkan countries, have resulted in an unprecedented growth of sugar imports from these countries, in particular through illegal triangular trade whereby sugar purchased in advance at the world market price is re-exported to the European Union,

H. whereas in view of the possible accession of the West Balkan countries to the EU in the future, it would not be desirable or reasonable to create economically non-viable excess sugar-producing capacity by stimulating it with preferential treatment,

I. whereas one of the objectives of the CAP is to promote the multifunctional nature of agriculture throughout the Union and whereas it should contribute to ensuring a fair standard of living for the agricultural community, as set out in the Constitution for Europe and the Lisbon strategy; whereas the latter emphasises the need to improve the level and quality of employment and ensure greater social cohesion; taking the view, following the resolutions adopted by the European Council in Luxembourg ( 12/ 13 December 1997) and Berlin ( 24/ 25 March 1999), that agriculture must continue as a Europeanwide activity, also including the less-favoured regions,

J. emphasising the importance of the resolution of the European Council in Brussels ( 24/ 25 October 2002) which states that the reforms must be carried out in a way that gives due consideration to the specific problems of the less-favoured regions; and whereas, at the same time, efforts should be made to maintain competitive European production on a sustainable basis,

K. whereas — as called for in the Brussels European Council conclusions — the requirements of producers living in disadvantaged regions of the EU must be met,

L. whereas the reform of the common organisation of the market in sugar should serve to ensure that prices are set at a level which will provide an adequate income both for Community producers and for suppliers based in the ACP countries and in the LDCs,

M. whereas the general tendency of the Commission communications is to upset the existing balance in the sugar sector (to the detriment of Community producers, suppliers based in the LDCs and ACP producers), and to threaten to eliminate the growing of beet, the sugar industry and associated economic activities in numerous regions of the European Union,

N. whereas the reduction in prices and quotas envisaged by the Commission will lead to devastating income losses for those involved in the sugar sector, including beet growers, without — in all probability — bringing any real benefit to consumers, as has already occurred in earlier reforms, where a reduction in the price of raw materials has not led to a reduction in consumer prices,

O. whereas sugar cane occupies a very dominant socio-economic position in some of the outermost regions and plays an irreplaceable role in terms of farmers' income in those regions, which already suffer from specific and permanent structural disadvantages which are recognised by the Treaties,

P. whereas the growing production of sugar in certain leading sugar cane-producing countries has serious impacts on the environment, such as the devastation of rain forests, land erosion and the exploitation of the natural resources, water, soil, etc.,

Internal aspects of the reform

1. Points out that stakeholders in the sugar sector need sufficient predictability if they are to make the necessary investments to become more competitive; considers, therefore, that it is vital that the Commission should now clarify its intentions for the post-2008 period; suggests that the reform of the common organisation of the market should not be altered until the end of 2012;

2. Welcomes the Commission's extended impact assessment of the various options for reform, but regrets that the document does not discuss the exact consequences of the proposed reform in the various Member States and different sugar-producing regions, particularly in terms of employment in the sector;

3. Calls on the Commission to carry out a detailed impact assessment without delay for the purpose of studying the socio-economic repercussions which the reform will have both in the case of sugar beet producers and in the case of workers in the industry, and also the effect which it will have on the abandonment of certain rural areas in the EU; calls on the Commission to extend its impact assessment study to the possible effects of the reform on the cereals market;

4. Notes that the reduction in sugar prices proposed by the Commission goes beyond the requirements for compliance with the WTO rules; therefore calls for this reduction to be limited to what is strictly necessary to achieve and maintain a sustainable, efficient, robust sugar production in the EU, in compliance with the WTO rules; considers that the reduction in quotas must be governed by the same principle and that the cumulative effect of the reduction in prices and quotas calls into question the viability of the sector in both the most vulnerable and the most competitive regions;

5. Rejects the Commission's proposal to increase quotas for isoglucose, as this would make it necessary to further reduce the quotas for sugar;

6. Considers that the current reference price system proposed by the Commission is not workable and will fail to achieve market stability; therefore suggests that the current price support system should be maintained as a safety net, to prevent severe imbalances developing in the sugar market;

7. Regrets that the question of quota ownership has not yet been legally determined and calls on the Commission to establish that the quotas are owned by the individual beet and cane growers;

8. Considers that the quota transfer system proposed by the Commission fails to meet the objectives of competitiveness, employment and Community solidarity; rejects it on the grounds that it threatens those that are most vulnerable, in particular by causing a transfer of jobs and a relocation of productive activity which is unacceptable;

9. Calls on the Commission to consider setting up a specific fund, managed by the European Union, to enable those wishing to leave the system to do so under reasonable conditions, through the voluntary sale of quotas to the European Union at an attractive price, degressive over time, for a limited period, immediately after which these quotas should be abolished; suggests a financing formula which is neutral in budgetary terms and involves stakeholders in the sector and also the market;

10. Considers that quotas are an appropriate means of achieving a balanced development of production throughout the Community and that they should be used to that effect; suggests that the legislative proposal include the concept of a minimum production quota, to be maintained within a Member State;

11. Calls on the Commission to withdraw its proposal which allows the transfer of quotas between Member States;

12. Points out that the new Member States joined the European Union on the basis of commitments that have demanded a significant effort to meet; suggests that the Commission should give thought to an arrangement whereby those States would not have to suffer excessive quota reduction measures; draws attention, in this context, to the substantial difference in the manner in which quota B is fixed for the new Member States; is delighted at the Commission's proposal to award full compensation to sugar beet growers in the new Member States;

13. Notes that the reform should be consistent with WTO rules but should also ensure a balance on the Community sugar market, the continuation of production and the protection of farmers' living standards;

14. Considers that the expected cuts in or abolition of export subsidies must not result in savings of Community budget resources but should be used for the benefit of the sector in order to enable farmers to be more adequately compensated for loss of income or other measures to be taken to achieve market equilibrium;

15. Calls on the Commission to take account of the outcome of the WTO panel in drafting its legislative proposal; in this context, hopes that the document will put forward solutions as regards the future of C sugar; for instance, calls on the Commission to take urgent steps to develop alternative outlets for the use of sugar so as to offer fresh marketing prospects for Community production, having regard, in particular, to the opportunities afforded by the development of biofuels; calls on the Commission to examine the possibilities of using sugar as biofuel, from an economic and environmental point of view;

16. Calls for the application of social and environmental standards to the production of sugar both as food and fuel, including at least the environmental standards of cross-compliance and extended crop rotation as farmers' contribution to soil rehabilitation, thereby also promoting the multifunctional nature of agriculture in sugar production;

17. Believes that the compensation for likely income losses is inadequate; proposes that in the event of a limited cut in prices, as suggested in paragraph 4, the budget originally proposed by the Commission should be maintained and allocated specifically to planters and beet growers so that they receive the fullest possible compensation; calls also on the Commission to ensure that, when compensation for price reductions is being calculated, the lower prices practised in the Member States which have applied them are taken into account;

18. Hopes that some of the funds referred to in paragraph 8 (or some other specific fund) can be earmarked for farmers' incomes, as compensation for the loss of their delivery rights and with a view to helping them switch to other activities; also calls for social security measures for the workers affected by the closure of sugar farms;

19. Endorses the Commission's commitment to special treatment for the outermost regions; nonetheless regrets the abolition of marketing aid; calls for the reinstatement of this mechanism and total compensation for income losses so as to take proper account of the disadvantages specific to the outermost regions;

20. Hopes that the Commission will carefully assess the production situation in the disadvantaged areas of the EU and will identify the action which needs to be taken in order to prevent sugar-beet production from ceasing in such areas in the wake of the reform;

21. Calls on the Commission and the Member States to monitor closely the social consequences of the possible closure of factories, due to the forthcoming reform of the sugar regime, and to take appropriate action if social plans are unsatisfactory;

External aspects of the reform

22. Points out that the Union's ability to manage the supply of sugar on its market plays a key role in the balance and viability of the common organisation of the market in sugar;

23. Urges the Commission to satisfy the requests of the ACP countries and the LDCs and explore the possibility of a regulatory arrangement for the EBA initiative which allows the European Union to retain its ability to manage supply and avoids making the level of Community production the obligatory adjustment variable of the new common organisation of the market; suggests that this formula should take the shape of instruments for the quantitative monitoring of import quotas which could be reviewed at regular intervals on the basis of the real impact of the EBA initiative on the development of the countries concerned, particularly in terms of local employment and production; proposes that the quotas be at a level which enables other foodstuffs to be produced to meet the country's own needs;

24. Calls for the Commission's legislative proposal to make it impossible to export any sugar from third countries to the European Union through triangular trade via the LDCs;

25. Calls for the production of imported sugar to be subject to the same social and environmental standards as production of sugar in the EU; in the event that the supplier countries fail to comply with those standards, calls for the imposition of a levy on the imported sugar, which should be channelled into a new EU fund to promote humane and environment-friendly agriculture in the sugar-supplying developing countries;

26. Calls on the Commission to establish quotas for the West Balkan countries without delay, and based on duly confirmed historical data, in a way which ensures that these quotas will not overrun the net balance of domestic production and consumption, and, consequently, will not allow them to re-export sugar to the EU;

27. Calls on the Commission to improve the control systems put in place to verify whether the rules of origin are respected, especially since increased access to the European market through the EBA scheme may create price differences which could incite fraudulent practices;

28. Calls on the Commission to urgently propose proper flanking measures to assist ACP countries depending heavily on sugar exports to the EU in increasing their competitiveness and enhancing their capacity to diversify their economic base;

29. Calls on the Commission to ensure that the current reform is built into the European Union's position in the WTO negotiations so that future multilateral commitments do not require further reform, which would result in producers having to pay twice;

30. Urges the Commission to take into consideration the impact of the reform in particular in Brazil, where sugar production and processing is controlled by a small number of individuals, to the detriment of the many who work in the sugar fields and factories; considers that the EU has a moral responsibility to ensure that its reforms do not facilitate the unsustainable latifundary method of sugar production as practised in Brazil;

31. Calls on the Commission to negotiate coupling of the reform of the European common organisation of the market in sugar to similar reforms of the sugar market organisation in other countries, predominantly the United States of America;

32. Calls on the Commission to do its utmost to reach international agreements within the WTO framework on the control of sugar production and sugar prices;

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33. Instructs its President to forward this resolution to the Council, the Commission, the Parliaments of the EU Member States and the Governments and Parliaments of the ACP and LDC countries.

[1] OJ L 178, 30.6.2001, p. 1. Regulation as last amended by Commission Regulation (EC) No 39/2004 (OJ L 6, 10.1.2004, p. 16).

[2] OJ C 96, 21.4.2004, p. 17.

[3] OJ L 195, 1.8.2000, p. 46.

[4] OJ L 325, 8.12.2001, p. 21.

[5] OJ L 346, 31.12.2001, p. 1.

[6] OJ L 60, 1.3.2001, p. 43.

[7] OJ C 78, 2.4.2002, p. 79.

[8] OJ C 231, 27.9.2002, p. 49.

[9] OJ L 240, 23.9.2000, p. 1.

[10] OJ L 295, 23.11.2000, p. 1.

[11] OJ C 242, 29.9.2004, p. 8.

[12] OJ C 52, 2.3.2005, p. 47.

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