— last modified 23 November 2017
The current EU trade agenda shows a level of ambition and leadership never seen before, as Europe takes on the mantle of global champion of free trade. Ongoing negotiations with Mercosur could well lead to the most valuable free trade deal the EU has ever negotiated, showing that Europe’s rhetoric on free trade is backed up by concrete results.
As representatives of EU cane sugar refiners and EU sugar users, ESRA (the European Sugar Refineries Association) and CIUS (the Committee of European Sugar Users) are coming together to convey an important message to European negotiators: EU access to sugar should be included in these trade deals, in line with the overall spirit of the negotiations, which foresee significant increases in market access for both partners.
Europe benefits from the positive trade balance and growing exports of sugar containing products such as chocolate, confectionery and fine bakery wares, which carry a high EU added value. However their future success depends on a reliable, competitive and sustainable supply of sugar. Under the current circumstances, all of these aspects of the sugar supply chain are under threat.
Security of EU sugar supply chains has long been assured through a combination of EU domestic production and imports from third countries. However, especially since the removal of EU sugar production quotas, currently available modes of access to cane sugar[i] leave the EU cane refining sector under-supplied, and almost incapable of operating profitably. Indeed, under the current framework, EU cane refining will soon cease to exist as an industry.
This is bad news for Europe.
Firstly, it would see the EU reliant on just one (at times unreliable) crop for sugar production. Imports of sugar are vital to ensure the reliability of sugar supply to the European market, and indeed has been necessary multiple times during the last decade. Access to imports should always be available when needed, as the ad hoc opening of TRQs has not always occurred in a timely fashion in the past, meaning that just-in-time access to sugar was not always possible for EU industry.
Secondly, the geographic concentration of the EU sugar production sector would also be magnified. While sugar users ? particularly the food and drink industries ? are spread across Europe, beet production and cane refining are mostly located in different European regions[ii]. This complementary mix of locations offers great benefits to sugar users in terms of proximity.
Thirdly, 7 companies currently control 80% of EU sugar production. Losing the cane refining sector would only increase unhealthy regional concentrations. It is essential that the EU takes action to ensure a correct level of competition in our sector.
Any access granted for sugar in these deals should be through a tariff-rate quota (TRQ), where volumes are pre-defined and strictly controlled both for raw and white sugar. This should dispel once and for all the myth that Europe could become “flooded” with cheap, third country sugar.
If the EU wants to become the global standard-setter in free trade, it cannot approach negotiations with partners such as Mercosur from a position that can be perceived to be protectionist. Offensive and defensive interests must of course be balanced, but we cannot allow one sector to hold back the drive towards modern agreements that produce meaningful free trade.
