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WTO upholds Australia's challenge against EC sugar subsidies.

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Media release

Thursday, 28 2005 - MVT33/2005

WTO Upholds Australia's Challenge Against EC Sugar Subsidies

Trade Minister Mark Vaile has welcomed a World Trade Organization report which confirms that the European Communities (EC) must reduce sugar export subsidies.

The WTO's Appellate Body, in a report released in Geneva late today, upheld Australia, Brazil and Thailand's challenge to the EC's sugar export subsidies.

"The EC will be required to significantly reduce its sugar exports and expenditure on export subsidies. This will result in better conditions for Australia's sugar industry, which depends on the world market for around 80%

of its income," Mr Vaile said.

On average, the EC exports over 5 million

tonnes of sugar a year and spends around ï¿»1.3 billion (A$ 2.2 billion) a year on export subsidies. The Appellate Body has ruled that, consistent with its WTO obligations on agricultural export subsidies, the EC must limit its subsidised exports of sugar to 1.273 million tonnes a year and reduce its annual

expenditure on export subsidies to ï¿»499 million (A$ 840 million) a year.

"Removing up to 4 million tonnes of subsidised sugar from the world market will make a significant difference to Australian sugar producers who compete on the world stage.

"Australia has worked very closely with Brazil and Thailand, at government and industry levels, to secure this outcome."

"Australia will be seeking early implementation of the WTO rulings. They provide a powerful impetus to strengthen the pace and direction of EC sugar reform," Mr Vaile said.

"This ruling once again highlights the value of Australia being a member of the WTO with its strong dispute settlement mechanism that allows us to promote and defend our key trading interests."

Mr Vaile called on the EC to implement the rulings in a way that does not damage access to EC markets for some developing country sugar exporters in Africa, the Caribbean and the Pacific.

"The WTO has confirmed that there is nothing to prevent the EC from observing both its treaty commitments to those developing countries as well as its WTO commitments to Australia, Brazil and Thailand."

The Appellate Body report confirms the overall conclusions of the WTO Panel (in October last year) that the EC is in breach of its WTO export subsidy obligations.

Contact: Mr Vaile's office 02 6277 7420 - DFAT Media Liaison 02 6261 1555