The World Trade Organization (WTO) has again declared some European Union sugar exports illegal, dealing a new blow to the bloc's lavish system of farm subsidies, a trade source close to the case said Wednesday.
In their final ruling in a dispute brought by Brazil, Australia and Thailand, WTO trade judges reiterated an initial verdict of early August that the 25-nation bloc had exceeded limits on the export of subsidized sugar.
"As expected, the ruling has not changed," said the source, who had access to the confidential verdict.
The EU, which is already reviewing its massively expensive sugar regime, denies any wrongdoing and the bloc's farm chief Franz Fischler indicated at the weekend that Brussels would appeal against the ruling.
The WTO decision had been widely expected because so-called final rulings rarely make changes. But if Brussels opts to fight on, then it could be at least a year before the case concludes.
If it loses an appeal, the bloc must reform its policy or face the threat of sanctions from those bringing the complaint.
It is the second time in recent months that the WTO has rebuffed the giants of world trade -- the EU and the United States -- over their farm policies, with Washington fighting a guilty verdict in a cotton case, also brought by Brazil.
The results should strengthen the hand of developing countries which are demanding swinging cuts to such subsidy programs as part of negotiations at the WTO on reforming global commerce, including agriculture, analysts say.
"Reform of these unfair and harmful farm payments is long overdue. Rich countries simply can't keep breaking the rules and expecting to get away with it," said Jo Leadbeater, head of Oxfam International's EU advocacy office.
The WTO sugar ruling will not be made public for another month, but the contents have been widely leaked.
According to sources familiar with the case, the judges upheld the view of Brazil, the world's largest sugar exporter, and its allies that surplus EU production — so-called "C" sugar — exported by the bloc was subsidized, despite a claim to the contrary by Brussels.
They also ruled that some 1.6 million tons of sugar the EU buys from poor African, Caribbean and Pacific (ACP) producers at high prices — and which it then re-exports — had to be included when totting up the total for subsidized exports to see if it was under the ceiling.
ACP countries have expressed concern the ruling will deprive them of vital foreign earnings, but the WTO said there was nothing to stop Brussels continuing to buy the sugar.
Fischler, the EU's Agriculture Commissioner, said recently it would not be too difficult to shuffle the bloc's proposed plans to reform its 35-year-old sugar regime to take account of the WTO decision.
