EEC - Refunds on Exports of Sugar - Complaint by Australia
EC Sugar Exports (Australia) (Source: GATT Analytical Index)
|Products at issue
|Type of product
Sugar and confectionary
Key legal aspects
|P. Kaarlehto (Finland)
|B. Eberhard (Switzerland), I. Parman (Turkey)
|Legal basis at issue
|Claims at issue
|Defences at issue
|No of Pages (total / legal reasoning)
|32 (and 16 annex)
|Request for consultations
|Request for establishment
|Adoption of report
|Outcome of the proceedings
|L/4833 (25/10/1979) EEC – Refunds on Exports of Sugar – Complaint by Australia – Report of the Panel:
(a) The Panel concluded that the Community system for granting refunds on exports of sugar must be considered as a form of subsidy which was subject to the provisions of Article XVI, and it noted that the European Communities had notified their system of export refunds on sugar pursuant to Article XVI:1.
(b) When examining whether or not the Community system of export refunds on sugar was consistent with Article XVI:3, the Panel first noted that, in spite of various measures taken to limit Community sugar production, the Community regulations on sugar and their operation had not prevented production from continuing to increase, and neither exportable surpluses of sugar entitled to export refunds nor the amount of refund granted had been reduced or limited.
(c) Examining next the Community share of world export trade in sugar, the Panel noted that that share had increased somewhat in 1976 and 1977, although that increase was not unusual in magnitude. In 1978, however, that share had increased in such proportions that the Panel felt that the situation justified a thorough examination as to whether the Community system of export refunds for sugar had been applied in a manner which had resulted in the European Communities having more than an equitable share in world export trade in sugar. It was evident that the increase in exports was effected through the use of subsidies.
(d) When examining the development of various sugar markets, the Panel found that, despite the increase in Community exports in 1978, Community sugar exports had directly displaced Australian exports only to a limited extent and in a few markets. Furthermore, increased Community white sugar exports may well have resulted indirectly in reduced opportunities for Australian raw sugar sales in various markets.
(e) The Panel noted that a substantial share of Australian exports had taken place under long-term bilateral agreements with importing countries. It also noted that the International Sugar Agreement, 1977 (ISA) came into operation in 1978 and that this for its members resulted in a certain contraction in their sugar trade.
(f) In the light of all the circumstances related to the present complaint, and especially taking into account the difficulties in establishing clearly the causal relationships between the increase in Community exports, the developments of Australian sugar exports and other developments in the world sugar market, the Panel found that it was not in a position to reach a definite conclusion that the increased share had resulted in the European Communities "having more than an equitable share of world export trade in that product", in terms of Article XVI:3.
(g) The Panel noted however that the Community system for granting refunds on sugar exports and its application had contributed to depress world sugar prices in recent years and that thereby serious prejudice had been caused indirectly to Australia, although it was not feasible to quantify the prejudice in exact terms.
(h) The Panel found that the Community system of export refunds for sugar did not comprise any pre-established effective limitations in respect of either production, price or the amounts of export refunds and constituted a permanent source of uncertainty in world sugar markets. It therefore concluded that the Community system and its application constitutes a threat of prejudice in terms of Article XVI:1.
(i) No detailed submission had been made as to exactly what benefits accruing to Australia under the General Agreement had been nullified or impaired or as to which objective of the General Agreement had been impeded, and the Panel did not consider these questions.
See BISD 28S/80 and L/5113 (title: Article XVI:1 Discussions - Report to the Council - adopted on 10 March 1981) (document date: 20 Feb 1981)