After agreeing to comply with the AoA’s reduction commitments on export subsidies on sugar, the EC issued a Regulation(56) for 2001/2002 to 2005/2006 on the common organization of the sugar markets(57). The Regulation established basic rules for the intervention prices for raw and refined sugar, in particular, the fundamental price and the lowest price for sugar beets, A and B quotas as well as C sugar, import and export licences, levies, export refunds, and preferential import arrangements(58).

          The EC’s sugar regime categorized sugar into A sugar and B sugar quotas. These quotas constituted the highest quantities eligible for domestic price support and direct export subsidies (refunds)(59). For the entire customs union, the basic quantities of A and B sugar were 11,894,223.3 tons and 2,587,919.20 tons respectively(60). Sugar produced in excess of A and B quantities, called C sugar, could not receive domestic price support or direct export subsidies and had to be exported within a certain timeframe; otherwise, a charge was levied on that sugar(61).

          The Regulation also provided for intervention agencies to purchase sugar at a price level which would guarantee a fair income for sugar producers(62). The actual price received for refined sugar was approximately 10 to 20 percent in excess of the intervention prices(63). These intervention prices also applied to the EC purchasers for imports of sugar from African-Caribbean-Pacific Group of States (ACP)(64) and India(65).

          According to the AoA, the EC had to comply with its commitments to reduce budgetary outlay and quantity limitation levels from 1995. The commitments in Section II, of Part IV of the EC’s Schedule amounted to 499.1 million euro and 1,273.5 thousand tons from 2000 onward(66). The EC’s footnote provided “[d]oes not include exports of sugar of ACP and Indian origin on which the Community is not making any reduction commitments. The average of export in the period 1986 to 1990 amounted to 1,6 mio t.”(67) According to the Partnership Agreements, the EC was required to import 1,294,700 tons of cane sugar from ACP and 10,000 tons of sugar from India(68).

Table 3: The EC Exported Sugar Quantity 1996-2002

Quantity (Thousand tons)	1996	1997	1998	1999	2000	2001	2002
Reduction commitments	1,499.2	1,442.7	1,386.3	1,329.9	1,273.5	1,273.5	1,273.5
Actual export	4,209.2	5,151.9	6,357.2	5,086.5	6,203.3	6,060.0	4,707.8

Table 4: Average Level of Real Prices during Observed Cycles

Cycle	1974-80	1980-89	1989-95	1995-2002
Average price (US cents/lb)	47.98	19.72	14.60	9.18