Subsidies to end

Manufacturers are waiting to see if the European Commission will stall a collapse in sugar prices by appealing against an expected World Trade Organisation (WTO) ruling against European subsidies.

The WTO will almost certainly conclude this month that European Union (EU) support for sugar is unfair and creates dumping on the world market, which undermines sugar sales by developing countries. Some African, Caribbean and Pacific countries are the only nations not subject to EU duty or quota rules.

Cliff Luckham of the British Cake, Chocolate and Confectionery Association said that an EC appeal against the expected WTO ruling would probably fail. "All we see this doing is delaying the reform of the EU sugar regime," he said, claiming that a successful appeal would not prevent reform, either.

The earliest date for a reform of the present regime is July 1, 2005 but an EC appeal could delay that for at least a year.

The British Soft Drinks Association (BSDA) said sugar in the UK now costs 15-22% more than in some other EU countries because of the regime's national quota system, although Luckham put the premium at 10%.

Luckham agreed that the artificially high price had been one of the main reasons for job losses in the sector. "We reckon that in the past five years 10,000 jobs in our industry have gone and if things don't change we see that continuing," said Luckham, adding that reform would probably introduce transferrable production quotas to the EU and more price transparency.

The BSDA added: "British jobs are being lost and will continue to be lost until the sugar regime is changed."