GENEVA - The World Trade Organisation has confirmed that European Union subsidies for sugar production are illegal, an Australian diplomat said on Thursday.
Australia's ambassador to the WTO in Geneva, David Spencer, said the organisation's appellate body had rejected an appeal by the EU against a ruling last October and upheld a complaint by Australia, Brazil and Thailand.
The WTO disputes settlement body had ruled last October that the EU's subsidised exports had been exceeding an agreed 1,273,000-tonne-a year limit since 1995.
The EU appealed against the decision four months ago.
Asked if the appellate body had rejected the appeal, Spencer said: "Yes".
The WTO, which has already circulated the decision privately to the parties involved in the dispute, was due to publish the ruling later in the afternoon.
The EU's Agriculture Commissioner, Mariann Fischer Boel, had pledged to decide on the final form of an internal reform package on sugar once the WTO ruled on the appeal by Brussels.
Last November, 10 EU countries objected to the European Commission's plans to overhaul sugar production and support, which was partly designed to adapt it to the changing face of global trade.
Developing countries in Africa, the Caribbean and Pacific basin, which currently have preferential access to EU markets, also fear the changes could cripple their local industries whose profits rely on high European prices.
Brazil, one of the world's largest sugar producers and exporters, along with Australia and Thailand, had argued in their complaint in August 2003 that subsidies in the European bloc severely distorted the world sugar market.
04/28/2005 14:18 GMT