The European Union subsidies for sugar distort international market prices and are harming Chinese sugar farmers, an expert with China's research institute said Thursday. 
 
Zhao Yutian, a research fellow with the Research Center for Rural Economy based in Beijing, said at a news briefing that Chinese farmers, who are already struggling with poverty, suffer negative consequences from the EU subsidies for sugar.
   
Guangxi Zhuang Autonomous Region of China is one of the poorest areas with 18 million people living in poverty, he said. The price for sugar produced there dropped 35 percent compared with that before China's accession to the WTO, Zhao said.
   
For more than ten years, sugarcane cultivation has been a significant livelihood source for farmers in the region, and has even contributed to poverty reduction. With an average annual income growth of 14 percent in the 1990s, an estimated 1.1 million sugar farmers have been lifted from poverty.
   
With China's accession to the WTO and the subsequent opening up of the sugar market, farmers' earnings from sugar have been decreasing in the face of unfair competition in the international market. The sugar processing industry has also been negatively affected; and consequently, government revenues have also declined.
   
After the accession, sugar prices have dropped by 35 percent -- from 4,000 yuan (about 483 US dollars) per ton in October 2001 to 2600 yuan (about US$314) per ton in April 2002.  The price dropped even further to 2,150 yuan (about US$258) in August 2002.
   
"If sugar prices have not dropped to such unreasonable levels, Guangxi's sugar industry can, in fact, help the local farmers reduce poverty," said Zhao.
   
The highly protective measures, including export subsidies, price control and import control of the European Union over its sugar industry result in the EU producing more than its local market needs, Zhao said, adding that oversupply is being dumped in overseas markets at a subsidized price, thus creating unfair competition.
   
It is estimated that EU subsidies depress sugar prices by as much as 10 to 20 percent, he said.
   
A release by Oxfam Hong Kong, an independent development and relief agency, shows that EU subsidies for sugar distort international market prices and create unfair competition.
   
Oxfam urges trade ministers in Cancun for the Fifth Ministerial Meeting of the World Trade Organization now to set a timetable for the elimination of unfair agricultural subsidies.   "Rich countries have been creating obstacles to an agreement to end unfair subsidies. Such unfair trade practices have taken away from developing countries numerous opportunities to end poverty," said Phoenix Leung, Policy officer of Oxfam.

(Xinhua News Agency September 12, 2003)