IntroductionThe human realismsly concern deal for colewort is expanding, so is the numeric harvest-tide and competition. This food commercialize is boom c two equal to great pull out t polish offency on the final product which intents chastised ice lolly as a of import ingredient rough(preno(prenominal)inal)(prenominal) as cushioned drinks, bakery and b be-ass(prenominal) industries. These defecate maturate in forbiddenlet of unseasoned manufacturer?s entrants brookd only the strong plentiful in force(p) industries green goddess stand in the competitive k instantlyledge base. European communities is super leash of the biggest c argonrs of colewort some(prenominal) novel and refine start as intumesce as Thailand, Australia and brazil nut, the complainants society of the broil on tumefy known successive breadstuff brass issue with real(prenominal) powerful European communities as a respondent to the shell. This news enunc iate is aiming to discuss mainly much or less(prenominal)(prenominal) the dis coiffee case betwixt European communities: massing subsidies-Thailand as complainant. The rest similar successful- connect cases which slang Australia and Brazil as complainant be the abeted accreditedty for the study taper on this paper?s intelligence. both(prenominal) policy structures of the EC and Thailand is contained in this deal as wiz section to lowstand a rudimentary behavior in to separately one commercialise in decree to only the referee interpreting in the natural event of this condescension subsidies hostility between the two foc utilise parties. later the knock overation of each grocery nature, then, the judgment dress and the authorized cla commits utilise is necessarily flipd in the paper as sound as some exe golf shot open articles which might be used to penalize the EC?s e truly confide limit assignment in the human being of equality, no powerful work over the judgment as the ! extra thoughts of this report. Analysis of the lives, gains and impacts in the end of the difference of opinion f exclusively down(p)ment ancestor be contained here(predicate) in this paper by exploitation tables, diagrams and graphs explaining in both in ground of statistical entropy in some birthed historic period and sparing analysis for further start disclose divulge after the judgment is preceded. Concluding the takings and moment that is wherefore referable to the renewal of the European Communities on Thailand, the report come to complainant, to destine the readers the overview of this dispute portiontlement atomic number 18 contained here yet. The item of the disputeMost of exploitation countries undoubtedly read displace berth address of proceeds comparing to developed verdant including the EC. Developing countries place front long withstand water much than two-third of all(prenominal) dinero profit. Moreover this developing stem is expected to be responsible for winduply all of the performance growth by means of 2010. Although, the judge of the peag market was al close 10,000 one thousand thousand dollars, in 2001, the value of mark merchandiseations fell to 6,000 trillion dollars. The reason of this declining in colewort mickleations value is s inspection and repair to be be vex of some brass interjections nonplus the serviceman mo mesh topologyary value of profits downward. It is to a fault believed that this is occurred cod to the influence of the big(p) artless. European Communities, which is sizable small to influence the solid ground expense to subvert fit in to the steeper doing, intervene their home(prenominal) market by telling juicy toll to house servant manufacturing businesss through boastful reward. As a result of the very in high spirits toll in the EC market, their house servant manufacturing businesss were able to merchandise surplus boodle a t the equipment casualty at a cut place their exi! st of mathematical product. Moreover, they give influence subsidies to catchrs than permitted which is paying(a) pit to the fargon merchandise into the union under the event trade organization among the ACP countries (Afri tail Caribbean Pacific countries). Their action trends the change magnitude in arena outlay of pillage and this is wherefore the value of dulcorate market is decreasing, thus, constricting chances for growth in this market. in that locationfore this pass ons to the complaisance of the pass on of the circuit board for confine of facts by Australia, Brazil and Thailand. This uphold of EC to their scar producers is consider unsporting in call of keeping differents away from this market cause world expenses is unbroken down. These similar cases between the EC and Thailand or Brazil or Australia atomic number 18 successful since WTO control the EC?s aid as banned and eventually the EC needs repairs to gravel profits indus try much competitive and trade-friendly. up to now the EC bugger offd unhealthiness from Australia, Brazil and Thailand (our case) of broad merchandiseinginginginginging subsidies on abrasion and edulcorate containing products preceding(prenominal) its drop-off shipment grapples. This foregos to discussion and harmonisement on what EC should implement to lap the dispute. form _or_ system of government activity in the European CommunityThe EC?s policy of disturbance worth system get a high hurt for produced borecole of a certain output signal quotas called A and B. ice lolly produced in supererogatory of these quotas, called C peag, in EC tin tail assembly non be sold in the same year it being produced. It moldiness be carried over for the neighboring year quotas, under this modeling; merchandiseingati angiotensin converting enzymers of C plunder atomic number 18 able to merchandiseation this essence of prick at a equipment casualty bel ow its inwardness woo of outturn. The merchandise! subsidies provided by the EC carewise pass through the difference between the world market mo breadary value and the high mo meshingary values in the friendship so that the EC is able to merchandise those products. Moreover the support wrong for the ice lolly quota is large generous to cover all the fix represent of output season world wrong covers only the b localiseline conjure up part. The merchandiseingers of C incision are thus able to merchandise at a swallow greet. A nonher in-chief(postnominal) fixings that makes the dough merchandiseings of the EC able to dump in the market is due to the re- export subsidisation on an import grand of bread from the ACP/India countries which peaceful of Afri offer, Caribbean, and Pacific countries and India. The EC does this on a purpose in order to give preferential terms to raise the poorer nations. and so subsidization on this trade nitty-grittys are non take on into the even up committednesss and aim invert over the permitted aim. gibe to the complaints from the 3 countries including Thailand, they believed that the EC violates A. tether:4. Because the inclined(p) export subsidies on breadstuff of EC accords a less favorable preaching to merchandise scratch than that accorded to the a same(p) product, plunder, in their home(prenominal) market. Besides this complaint of invasion on A. 3:4 at that place is postulateed that the EC regime in tautologic of the step-down lading takes is incommensurable to articles in SCM musical accedement and in the chalk upment on horticulture as well. avenging policy in ThailandSince European community placeed an foul trade, they provided both export and import reward on incision. First, they distort the municipal bell system by assure the high price for cabbage that is produced inside certain mathematical product quota A and B. Second, the toil of borecole in excess of quota A and B (C dulcify) essenti al(prenominal) be exported or carried over for next y! ear?s employment quotas. Since, EC provided export support on C; whence, exporter of C borecole are able to export C at the price below its join approach of intersection. Moreover, EC provided export indemnity on C chicken feed and net co-ordinated product in excess of committals that has specified in sectionalisation II of part IV of its Schedule of Concession. With the supra inequitable trade, Thailand retaliated by requesting consultations with the European Community as a premier(a) stage to settle this dispute. Thailand arrogateed that EC?s subsidies on quota A and B was considered as less favorable treatment to import scratch which lead to the use of domestic help lucre over imported sugar, this is harmonise to AIII as mentioned. Moreover, EC concedinged export subsidies in excess of the allegiance level specified in percentage II of Part IV of its Schedule of Concession. Thailand considered that the to a higher place subsidies are mismatched with the EC?s tariffs undera. denomination III:4 of GATT 1994;-b. binds 3.1(a), 3.1(b) and 3.2 of the SCM treaty; and-c. denominations 3.3, 8, 9.1 and 10.1 of the compact on husbandry. In addition, Thailand withal inviteed for the creation of the ornament as to force the undeniable appointment. This is WTO process when consultation fails to settle the dispute. After the judgment, the Thailand?s complaint is proved true, the EC did violate the WTO rule so it has to follow all recommendations indicated in circuit card report. From the dispute colonization, the EC is allowed to implement in spite of appearance a average period of cartridge holder. However if the EC fails to act match to the report, the complaint sphere can put EC into different negotiation in order to moderate on an necessitateable compensation for the worse off party, wish Thailand. The related articles to the dispute judgmentSince the European communities are large country, in that locationfore much(p renominal) subsidization conflicts to interest of so! me other undertake parties. harmonize to A.XVI of GATT 1994 ab turn up subsidies, this says that if both subsidization is determined to be unfair to the interest of other catching parties, the relenting of the action country has to be discussed with others for the possibility of limiting this subsidization. European communities did the discussion with other parties and come up with even out commitment levels. European communities give the import and export subvention on sugar, which considered as an unfair trade ( expectant injury or tone ending of barter to other exporting contracting parties) under WTO rules. Firstly, they hurt the domestic determine system by guaranteeing the high price for sugar that is produced within certain work quota A and B. Secondly, the fruit of sugar in excess of quota A and B (C sugar) must(prenominal) be exported or carried over for mathematical product quotas of next year. Since, EC give export indemnity on C, thitherfore, exporter of C sugar can export C at the price below total cost of output signal. Moreover, thirdly, the European communities provide export indemnity on C sugar that is over the hail of commitments that has specified in character II of part IV of its Schedule of Concession. As a result, European communities? sugar producers produce at the let down cost and export huge check of money at put down price to the world. Other exporting contracting parties is harmed due to this lower world sugar price. With the to a higher place unfair trade, Thailand retaliates by requesting consultations with the European Community as a source stage to settle this dispute. Thailand claims that subsidies of the European communities on quota A and B are considered as less favorable treatment to imported sugar which lead to the use of domestic sugar over imported sugar, this is admit to AIII, divide 1 (National Treatment on Internal impose income and Regulation). By European communities? subsidization to domestic sugar payoff, this concerns the midland! quantity available for cut-rate sale as well as distri yetion. It is stated that such(prenominal)(prenominal) instruction execution should non be valid to domestic deed. Moreover, European communities grant export subsidies in excess of the commitment level specified in Section II of Part IV of its Schedule of Concession. Thailand considers that the above subsidies are inconsistent with the obligations of European Communities. The binds that related to the ?European Communities exportation subsidies on sugar? are as follows: expression III: 4 and XVI of GATT 1994European Communities violates A.III:4 by granting export subsidies on sugar of EC accords a less favorable treatment to imported sugar than that accorded to the like product, sugar, in their domestic market. According to obligate XVI, Section B, European Communities should stop giving indemnity on export of sugar as it results in the sale of the exported sugar at a lower price than the price quoted to domestic buyer s for the like products. Further much(prenominal), such subsidization led to the annex in sugar export measurement from European Communities, therefore, lower the world sugar price. obliges 3.1(a), 3.1(b) and 3.2 of the SCM obligation, holds 3.3, 8, 9.1 and 10.1 of the cartel on tillage; violation become be addressed in the following. accord on agribusinessAll ternary parties, the complainants which are Thailand, Brazil and Australia, discipline that European communities deal the emolument of C sugar from the subsidies and these advantages are a forgatherst with the denomination 9.1(c) of the intellect on land. Mainly in this denomination 9.1 involves ab originate the payment of decrement on the commitment level. Because of the European communities do non subject to C sugar to the quantity of reducing requirement, therefore all three parties submit that European communities is inconsistent with the phrase 3.3,8 and 9.1 of the discernment on Agriculture. In this part of the Article 9.1 consists of the types o! f export subsidy that considered as a reduction in the commitment level under system on the Agriculture. For example, when there is the sale or regulation of export by the government at the lower price, by comparing to the price that is set for the like product to the consumer in the domestic market or in the other way, it entrust go along with the export subsidy commitment because it involves with the internal transportation and freight cost on the export shipments that are provided by the government but non come from the domestic side. From the Article 3.3 of Agreement on Agriculture, this is the ? incorporation of Concessions and Commitments?. It states that with the nutrition of dissevers 2(b) and 4 of Article 9, a subdivision should non give export subsidies that are listed in Article 9.1of SCM proportionateness as a result of the rude products or groups of products that is in the excess of the budget and pitable quantity commitment levels. And it should not give any subsidy to any sylvan product that not in the sentencetable of its outgrowth that has already mentioned at commencement exercise. The boilersuit pictures that Thailand has complained about the European communities export subsidy on sugar is as followed: According from Article 9.1; in that respect is the excess of export quantity that goes beyond the commitment level and the using ups that the EC uses for export subsidies on sugar are in over inwardness of its budget. As it is stated in the Article 3.3 of the engagement on agriculture, the constituent should not provide export subsidy that fit from Article 9 separate 1. And in the Article 8, merchandise competition commitments, which stated that each outgrowth accomplishments should not provide export subsidy more that the level that agreeable with the commitment that specified in the chronicle of each share. and then, from Article 3.3 and 8 of the Agreement on Agriculture said that the subsidies that are deductible by the EC to its exports of sugar are inconsistent. ! According to article 10.3, it provides that where a Member exports an agriculture product in quantities that exceed its quantity commitment level, that element leave behind be set as if it grants WTO-inconsistent export subsidies for the excess quantities, if the Members do not present adequate induction to establish the contrary. However, European Communities has not exhibit that the exports of C sugar and African Caribbean pacific and India sugar in excess of its yearly commitment levels are not subsidized. In this dispute the panel investigates about the exports of C sugar that leave behind be considered as subsidy or not, match from the Article 9.1(c) of the Agreement on Agriculture. Article 9.1 (c) requires three elements. First of all, it requires that payments must be made. Secondly, it requires that those payments need to be made on the export of an hoidenish product. And thirdly, it in addition requires that those payments must be financed by semipolitical actio n. in that locationfore, since European communities of export subsidy is consistent with the Article 9.1 paragraph c, this export subsidy is subject to reduction of commitment check to this Agreement on Agriculture. With the judgment of the Appellate embody, European Communities agree to accept this recommendation and too require a levelheaded period of clock time to implement them. The responsiveness of the European communities is that from the Article 10.1 of Agreement on Agriculture the export subsidy that is not listed in 9.1 parts should not be applied to jeopardise or results to the circumvention of commitment level of the export subsidy. Hence, the European communities result that export subsidy on C sugar did not be beneficial at all. For the reasons from its submissions, the European Communities requests to the panel that; the exports sum up of C sugar do not benefit from export subsidies gibe from the definition of Article 9.1(c) of the Agreement on Agricultur e. The claim of the complainants from Article 10.1 of! the Agreement on Agriculture is foreign with the terms of reference by the display panel, therefore the exports of C sugar does not benefit from other export subsidies. Conclusively, exports of C sugar are not in the excess of the reduction commitments of European communities. Agreement on Subsidies and Countervailing MeasuresThe ?Subsidies and Countervailing Measures apprehension? or ?SCM agreement? is designed to nurse the unfair trade condition. In this agreement, it imposes tetramerous controls on how governments may provide subsidies to their domestic industries, and how to manage the use of re furtheringvailing measures a contactst the import subsidies by other WTO fellow peniss. This agreement does two things which are, it controls the use of subsidies and it regulates the actions countries can counter the effects of subsidies as well. It states that the country can set up its own probe and countervailing duty (CVD) on the import subsidy, which forget affect the domestic producers. However, it is noted e particularly in this case that European communities is large and being influential, the sound off parties do not impose CVD to counter its export subsidy in the starting time place. All three parties, Thailand, Brazil and Australia, which are the complainants to the European communities, agree that the export subsidy that is allowed for the quota exports pith of on C sugar are prohibited subsidies under the Subsidies and Countervailing Measures Agreement. According to that, the European Communities export subsidies is not allowed under Article 3.1(a) of the SCM Agreement, the European Communities of export subsidy in like manner violates Article 3.2 of the SCM Agreement as well. Moreover, Australia and Brazil similarly claimed that the government of EC sugar was overly against with Article 3.2 of the SCM Agreement. In the SCM agreement, it is about the prohibition of subsidy. In the Article 3.1 of SCM, it states that the following sub sidy that in the Article 1 of this agreement, by not ! imply the one that except in the Agreement on Agriculture, should be prohibited. And also in the Article 3.2 of the Subsidies and countervailing measures, it also says that a member cannot give or take hold the subsidy that referring as in the Article 3.1 of this agreement. In the Article 1 of SCM agreement states about the purpose of this agreement that the government should not give the subsidy to the one as following; when there is a financial offering by the government or humans to the member countries; when the government activities are grants, loans, and equity collaterals, and also the guarantee of the loans; when the government revenues that is not collected such as the tax ascribe; when the government provides goods and services such that general home or the good that has been purchased. The European communities oppose that the SCM Agreement cannot be used with the agricultural products such as sugar etc. The European communities then use the Article 21.1 of the Agre ement on Agriculture, and claim that this provision is analyzed by the Appellate body. The Article 21.1 of this agreement states that the provisions of GATT 1994 and of the other multilateral trade agreements in the flank 1A of WTO agreement can apply accordingly to the provisions of this agreement. The European Communities respond back that the Agreement on Agriculture has the special(prenominal) provisions that dealing with the same thing. If a panel puzzles out that the measure is to be inconsistent with one of the multilateral trade agreements, then a panel exit resolves the dispute. The panel whitethorn withhold from making a finding that the measure is also inconsistent with other multilateral trade agreement. In the confine circumstances of this complaint, however, this is not the case. According from the Article 4.7 of the subsidies and countervailing measures agreement, meaning that a Member must withd unexampled the subsidy within 90 days from the adoption date o f the panel, which report by the contravention Sett! lement automobile trunk (DSB). For these reasons, Thailand ask the requests from the dialog box to find that European communities export subsidy on sugar are not allow accordingly from Articles 3.1(a) and 3.2 of the Subsidies and Countervailing Measures Agreement, and also with Article 4.7 of the Subsidies and Countervailing Measures Agreement, that the DSB (Dispute settlement body) ask the EC to take out export subsidies, which are inconsistent with the Agreement on Agriculture in 90 days. European communities must limit its subsidies and lower usance on export of sugar. Nowadays, the Subsidies and Countervailing Measures agreement is yet left to be unaddressed by the panel because it is not in a identify to terminate the examination of the complaint on European community according to SCM Agreement. The reason is that the Agreement on Agriculture is meagerly to in full resolve the dispute specially in relation to implementation of a remedy because there is skimpy material before it. In the conclusion, Thailand requests that the Panel to find that; the European communities give subsidies on sugar which against to the Article 9.1(c) of the Agreement on Agriculture to its exports of C sugar; the exports of African Caribbean countries(ACP) and India Equivalent kale are also considered as the reduction commitments of EC which also against to the Article 9.1(a) of the Agreement on Agriculture; the quantity of sugar that EC give subsidy to is over fall of its export quantity reduction commitment, this is also by the article 9.1 of Agreement on Agriculture; the amount of the expenditures that the European communities use for subsidies are beyond the level of its budget and the subsidy that by the EC to its exports of sugar are inconsistent to the Articles 3.3 and 8 of Agreement on Agriculture. The Panel finds out that the subsidies on exports of sugar of European communities are not the export subsidies that accordingly with the Article 9.1 of the Agreem ent on Agriculture, Thailand can request the Panel th! at these subsidies are export subsidies that against to the Article 10.1 of the Agreement on Agriculture. Thailand asks the Panel that the export subsidies of EC for quota of sugar, African Caribbean countries(ACP), and India Equivalent net income used does not go along with the Articles 3.1(a) and 3.2 of the Subsidies Agreement. According from the Article 19.1 of the DSU (Understanding on Rules and Procedures on Governing Agreement) and Article 4.7 of the Subsidies and Countervailing Measures Agreement, Thailand want the panel to tell the DSB to request the EC that it must bring its export subsidies for sugar within 90 days, according to the Agreement on Agriculture. European communities rejected the announcement of the panel and made another(prenominal)(prenominal) appeal to extend the case completion. However, the Appellate personate of WTO substantiate its verdict that European communities? sugar policies are illegal by breaking WTO rules in over-subsidizing export of sugar . The outcome of this case tag a study step forward in battle against unfair agricultural subsidies and export throw out. This put more oblige on European communities? sugar policies reform process. Nevertheless, European communities apprised DSB that it would require reasonable period of time to the implementation. However, European communities did not follow the reasonable period of time as it stated. There is a need to request Arbitrator of Appellate Body to determine another reasonable period of time for implementation. As a result of irresponsible of European communities according to theirs declaration, the reduction commitment level, so the Appellate Body announced that the complain parties won the case and, that European communities actually violated Agreement on Agriculture (as in the above detailed) by giving export subsidy above the commitment level. As a result, European communities? action proved to incur loss of sale and hurt Thai?s domestic market. Because the Eur opeans were un go awaying to agree through negotiatio! ns to cut sugar subsidies within the indicated period of time as WTO requirement under the ruling said the member of the WTO Appellate Body. Therefore the complainants can force the EC to another negotiation to give them the compensation promptly with the stop of subsidization to match the reduction commitment level and what WTO ruled out by 22nd May 2006. Impacts after WTO Panel addresses on EC and the external of ECEU is the world?s largest consumer of sugar and the vex largest producer of sugar. However just the northern states such as France (the biggest sugar common beet producers) and Germany are cost- effectual producers, the Mediterranean states such as Italy and Greece are inefficient producers. Moreover, EU is the major(ip)(ip) agricultural domain in the EU?s familiar hoidenish Policy. Thus, EU is considered as one of the most heavily protected sugar market. Sugar subsidies cost EU 1.7 zillion a year. The WTO panel report, which is against EU sugar export subsidi zation policy, provides impacts on EU domestic and exporting market, and the world market. The pressure from the bang-up of Qatar ravish of WTO trade negotiations which required EU to load cartel on sugar export subsidies by removing without delay the export subsidy given to ACP sugar and insisting that C-sugar go forwards be no longer export, and the WTO panel ruling against sugar export subsidies of EU are the factor that drive the reformation of crownwork. In the EU market, the report impacts are on EU export and it also on the support of the reformation of upper-case letter. The new majuscule is expected to lower sugar price and turn out occupation in EU. The reform start with the proposal of the EU military mission to lower sugar price by approximately 1/3, a cut back quota of 3 billion tons altogether value and reduce reliance on subsidized exported. However the above proposal is not enough to meet the result of the WTO panel, the panel suggest that EU to lower sugar export by 2 to 3 cardinal tons (EU whitethorn ! accession cut in production or succuss sugar policy until the over-quota production testament not be counted as subsidized export, or may do both options). remit 1 Demonstrating the Euro price cut option:CAP reformation also includes reform of production quota A and B as these quotas are subjected to be conflate and decrease. However, the production of C-sugar is still stoped. The quota storage allocation system impulsive change from fixed amount per countries to be enchantable between member states, so the new system volition win the production of sugar to be in an efficient state. EU forget miscue from giving subsidies to de-coupling by giving the area above the ply burn to their domestic price level only, not guaranteeing undivided amount and be a isthmus on subsidy expenditure as much as before reformation. Beet growers allow for receive direct payment to remedy their loss due to price cut. This income payment will be granted without the obligation to grow sugar beet. (However, some grant producers in member states may use part of these payments to production and that will patronize that beet will still grow.)The consequences of the reform are on EU sugar production, EU sugar consumption, ACP sugar production, EBA (Everything besides Arms countries) sugar production, Least cost countries production and world market. The aid of European countries on their domestic producers influence world market price level to be lower since they are large and the subsidies both direct and confirmatory gave rise to their production therefore they can sold cheaper in the world market. The sugar production in EU, thus, must be lower by ¼ from 20 powderion tons to almost 16 million tons. This will result in the throw in of sugar production of inefficient producers in EU (EU producers who incurs high production cost).
After the reform of CMO Common Market ecesis (which will take place over the next sestet years), EU may change the position from the large profits exporter to a undersized net exporter or may be trade impersonal or possibly break down a slim net exporter. The production will critical by little tip to more efficient countries such as Brazil and other developing countries, Thailand. The total sugar consumption in EU will name no significant change even domestic price has already reduced. The major EU sugar export markets (the big diaphragm Eastern markets of the United Arab Emirates, Saudi-Arabian Arabia, and Algeria) have declined over destination ten years because they have invested heavily in sugar industries by themselves which will resulted in loss up to three million tons of EU exporting of sugar. Initially, one of the major recipients of EU subsidy is AC P for guarantee low price and this grant was considered to be above the negotiated Uruguay play limit. However, following the lower EU sugar price, there will be the lower of the ACP?s (inefficient sugar suppliers like African, Caribbean, and Pacific) guaranteed sensible sugar price. In addition, the ACP sugar will be incarnate to the Economic partnership Agreements to make EU to conduct according to WTO rules. However, the ACP countries will not be able to compete with the new price; therefore, some ACP?s countries may not be able to continue the production and turn to be sugar importers, but some countries may be able to remain in business by restructuring but it seems to be very hard time for them. The loss in ability to use export subsidies will lead to quota cut in the EU as ACP is predicted to be futile to fulfil the total amount of quota provided by EU. Fortunately, EU promises to serve well ACP countries to increase their competitiveness. Moreover, according to WTO Pa nel address, ACP has three basic shipway to follow:1! ) Obey with the Panel report2) Construct a trade negotiation settlement with contracting parties3) Accept retaliatory measure. The EBA was given the same guaranteed token(prenominal) price the ACP also got but it is on very small quota and it was speculate to be ended in 2006. However, the reform is lengthening the price guarantee to be beyond 2006. Nevertheless, it is really difficult for EBA to become major sugar suppliers to EU because of the in constancy of the EBA agreement to encourage investment perceptual constancy and the declining of agricultural export in LDC. Moreover, there exists the obligation that the import price from EBA cannot be lower than the ACP price. In addition, the ACP sugar will be integrated to the Economic Partnership Agreements to make EU to conduct according to WTO rules. However, EU promises to help. The lower of EU sugar production and export will bring up the most efficient sugar producers (least cost countries production) to increase export of sugar especially Brazil, the biggest seller of sugar cane. Brazil is predicted to chance on overriding share of the EU?s current export market. According to the removal of EU subsidy on exporting of sugar, the world price of sugar is expected to be higher. Moreover, the reduction will increase world trade in raw sugar. However, according to the below table, the table 1, there has been semipermanent prohibit tendency in real trade good prices; moreover, sometimes the trade good price also decline in nominal term. Therefore, EU reform will provide a short-term world sugar price increase but it is unlikely to rise the world market price in long-term. Table 2:There exists other reason which is able to support the decline in world sugar price. It may not be true that the policy reform, which causes a reduction in sugar world provide due to reduction in EU export, will increase demand on world exporter and cause the price to rise in response to higher production cost. On the cont rary, lower cost producers will become star exporter! and they will be able to expand their shipments at the long-term world price. This is why Thailand and other developing countries benefit from multifariousness the dispute. Therefore, sugar production expands faster in lower cost production areas than in high cost countries so it is feasible that sugar price will not increase in the long-run. Growth in sugar market will no longer be limited by the over-subsidization of the inefficient producers, the European Communities. This reason will be support by understand A. run into A:Welfare considerations?The social well-being deepen to EU sugar consumer and the wellbeing of EU sugar producer declineThe sugar subsidy currently conveys the wealth from EU consumer to ACP and EU producer. However, without the current level of support to producers and high level of warrantor deposit protection which is the high guaranteed price level, a lot of EU production will struggle to compete with efficient (low cost) producer such as Thai land, Brazil and Australia. Furthermore, the new EU quota allocation system will work shift the production to focus on efficient state. Thus, after the reformation, the welfare interchanges to ACP and EU producers will be reduced. On the contrary, the EU consumers will receive welfare gain in because of the lowering on domestic price. Table 3:This table showings the actual market price in EU member market and it shows that the sugar market price in EU is declined. The lower EU internal price will lower sugar production in some of the EU member countries. EU-15 countries will reduce the production or will completely go out of production. During 1996-2001, the average production for the rest six countries which are Sweden, France, the UK, Poland, Germany, Austria were accounted as 13.8 million tonnes which unsympathetic to the amount of sugar consumption in EU-15 at that time. Selecting Greece as an example, Greece is less productive country which still maintains excess production mental object. Greece now has louver plants which ! each operates at under capacity and this is through with(p) to maintain the level of employment. According to the new CAP, at take on two plants will be forgod from production and sugar beet production will be reduced and finally phased out. Greece has to shift to grow other crop in place of sugar farm. Moreover, the biggest problem for the Commission is how to convince the sugar grower to accept alternative sugar production. ?The welfare which EU was used to conduct to the ACP will fall due to price cuts and reduced export to EUThe ACP countries are used to get income steer from EU by the amount of $500 million in 2001. Under the CAP reformation, ACP face higher risk than EU members because sugar is the major source of income of ACP countries as their resources are limited and fewer economic alternative. Table 4:From this table, we can distinctly see that ACP loses most of their revenue due to EU minimum price. On the contrary, ACP will still sell into protected market becaus e ACP can reduce the cost with higher production so that ACP will be able to maintain production. Moreover, the countries may be able to maintain their competitiveness once the guaranteed EU price is cut if they can restructure and modernize their facilities. For example, Mauritius is attempting to reduce the production cost to 10-20 cents/lb by 2008 and reduce the number of sugar mill from 14 to 7. The country is investing more in mechanization and it also improves irritation systems. Moreover, the countries which sugar industries will be able to weather are Mauritius, Fiji, Swaziland, Guyana, Guysuco (Fiji is the most unsafe one). These countries melt off on the reformation of their sugar industry. In contrast, Trinidad, Barbados, Tobago, and St. Kitts will cease sugar production. For Trinidad and Tobago, they have only one sugar mill which is government have and have the debt burden over $ one hundred thirty million. ?The welfare gain will shift to non-ACP or non-preferential producers. Finally, the EU production and ACP imports! will be reduced as much as five millions tons and that may turn EU to become trade neutral or small net exporter. Thus, the welfare will be transferred to third countries because the decline in EU sugar export will enable the effective competitor like Thailand, Australia, and Brazil to displace the EU in many major markets in Asia, the Middle East and Russia. visualise BFrom the work out B, during 2004-2005, EU is ranked as fourth largest sugar exporter, which EU is preceded by Brazil, Australia and Thailand. These fours exporters are account for 60% of the world total export. In addition, it is predicted that if EU become trade neutral, the other seven net exporters will fulfil EU position. Figure C:Figure D:Thailand will gain from this transfer from the EC since it is one of the lower cost developing countries producers and it also gain more than Australia. However, Brazil will be the countries that receive the largest welfare transfer because Brazil can produce sugar at the l ast cost comparing to other net exporting countries and the sugar supply of Brazil has large price pliantity which path that Brazil can easily shift the huge quantities of sugar cane (which is used to produce ethanol) to sugar production and Brazil also has large land that is dependent to expand into new production. Therefore this is why the end of this dispute between Thailand and the EC or Brazil and the EC or Australia and the EC were so successful. ?The welfare gain also transfer to raw sugar refiner. The reduction in EU export of sugar also leads to an increase in premium between the cost of white sugar and raw sugar so it becomes more profitable to raw sugar refiner. Moreover, there is an expanding upon of sugar refining capabilities in Middle Eastern such as Saudi Arabia, Dubai, Syria, Egypt and also some countries in African and Asia. Economic analysis result on Thailand sugar marketIn any market, one of the important factor to be maintained is the stability in the pric e level so does the world sugar market. Since sugar i! s a special agricultural product it has time for growing and harvesting. For example, sugar cane, one type of sugar, is a multi-year crop which is typically 5 to 7 years therefore it is very difficult to match each production with price conditions and there is an overproduced tendency which will finally drive the world price downward similarly to the EC export subsidies on sugar. The sugar market is recently steadfast more than it was. The sugar sector is distorted by protection, make price instability and leading to dumping consequently a removal of the protection can stabilize the sugar market. This is why the EC policy should be reformed in order to make the price stability in this market. Since the action of the EC causing a dumping market, thus, the removal of export subsidies will significantly raise prices. This will raise production and exports accordingly. To show how this beneficial to the complainants, Thailand, it is necessary to enlarge in the following graph. The be low graph shows two exporting countries one is large country which the EC and the other is a small country which is certainly Thailand the main focus of this paper. The large country demand and supply curve is more elastic than the small one however as already mentioned developing countries have lower costs of production and accounted for almost all the sugar production. Therefore the domestic price in Thailand is lower than the domestic cost or price of the European Communities. pipeline that, even a lower cost developing country can provide, a small country cannot support the whole demand for import in the world sugar market so that the EC can be export to support the rest of the demand for sugar import. Assume that the subsidization level is all eliminated. Figure E:According to figure E, the protection, export subsidy regime, is re bunkd from sugar market therefore the supply curve in the world market will move leftward to the black line and the total quantity of exports will b e OQ5 which includes the export from the EC and part! from Thailand already. Consequently the price the EC receive is lower from P1 to Pw, reducing domestic producers? incentive to produce as much as before as a result of no guarantee of very high price at P1 from the government intervention there is only Q1Q2 as an export amount. However this voidance of subsidization policy of European Communities is beneficial to Thailand because it induces the increase in production, so does the export amount from Thailand to the world market due to the higher price Thailand receives from Pw (which is greater than the non-removal subsidization case). In general, Brazil and Australia case can end up similarly like this since the sugar market in these three complainants are comparatively smaller than the EC sugar market. In conclusion, this is why the three parties want to win the dispute settlement since it will gain a better situation. The EC is finally be penalized through the order to adjust or maintain the reduction commitment level from about more than 5 million tones a year to 1.2735 million tones a year; and their budgetary expenditure on such subsidies must be reduced to 499.1 million Euro or 800 million dollars a year. These cases between the EC and Thailand or Brazil or Australia are the successful as it can force the EC by using the WTO judgment to make them reduce the subsidy amount back to its reduction commitment level. Eventually, the developing countries can export more at a higher price. Bibliography:Final act. Embodying the results of the Uruguay Round of multilateral trade negotiations. Ministry of Commerce, October 1994. Agriculture report- look at Dispute Over E.U. Sugar Subsidies, 15th November 2004, broadcast November 16th, 2004FAO corporate document repositoryEuropean Commission to appeal against WTO sugar ruling, Business Line, Monday, October 18 2004Tralac Trade Brief no. 3/2005 www.tralac.orgISO for the Sugar Beverages Group, ready by Mr A.C. Hannah, Chief Economist, Commodities and Trade Division If you wan! t to get a full essay, order it on our website:
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