Eventually,
the EC issued Council Regulation (EC) No. 318/2006 of February 20,
2006. This Regulation focuses on the improvement of the sugar regime
for the EC years 2006-2010.(114) In the Preamble, this Regulation precisely states that it is necessary
to arrange and reduce the quotas of sugar following the recent decisions
of the WTO.(115) The key goals of the Regulation are to eliminate sugar intervention,
combine A and B quotas, and eliminate over-quota sugar exports.
Regarding
the elimination of intervention prices, Article 3 provides that the
“reference price” of sugar will be reduced progressively
each year.(116) The minimum price for quota beet decreases from 32.86 euro per ton
in 2006/2007 to 26.29 euro per ton in 2009/2010.(117) These price reductions will save domestic consumers from shouldering
the higher prices for sugar for consumption. Moreover, it will prevent
over-quota sugar resulting from cross-subsidization as a result of
high intervention prices. In short, these measures intend to limit
exported sugar with respect to the “budgetary outlay”
of the reduction commitments.
Regarding
sugar quotas, the quota for the production of sugar is fixed(118) and not more than 17,770,537 tons per year.(119) The EC may benefit from an additional quantity(120) of up to 1,100,000 tons per year.(121) Out-of-quota production may be used for the processing of certain
products, carried forward to the quota production of the next marketing
year, or exported within the “quantitative limit.”(122) These measures intend to limit exported sugar regarding the “quantitative
outlay” of the reduction commitments.
The Panel and the Appellate Body effectively applied the law of export
subsidies provided in the AoA to resolve whether Footnote 1 should
be included in the reduction commitments. They adopted an economic
approach to support the provisions and strengthen their verdicts,
particularly when considering the average cost of production as a
benchmark to see if there was a payment in the form of “cross-subsidization”
constituting export subsidies within the meaning of Article 9.1(c).
Moreover, they applied a statistical approach when considering a number
of farmers participating in the A and B beets refund program to observe
whether sales of C beet involved export subsidies within the meaning
of Article 9.1(c). These approaches enabled an assessment of concrete
evidence and contributed to a well-reasoned decision. As a result
of the reliability of the decision, the EC surrendered and complied
with the recommendation of the DSB.
According to the new Regulation, the structure of the sugar
regime preserves self-sufficiency inside the union. But the EC is
no longer the world’s largest refined sugar exporter. Exported
sugar from the EC will sharply decrease from approximately 5-6 million
tons to roughly 1.27 million tons and its share of the world sugar
market will decrease at least 25 percent.