SUNS 4347 Thursday 17 December 1998
ARGENTINE SUGAR PRODUCERS DEFEND TARIFFS
Buenos Aires, Dec 15 (IPS/Marcela Valente) -- Argentina's sugar producers accused the government Tuesday of ignoring, at the recent Southern Cone Common Market (Mercosur) summit, a law that establishes a non-bloc tariff on Brazil's sugar until that country stops subsidising its production.
Foreign Ministers Guido di Tella of Argentina and Luiz Felipe Lampreia of Brazil agreed at last week's summit in Rio de Janeiro "to take all the necessary legal and administrative steps" to reduce the 23 percent duty on sugar imports by 10 percent, to 20.7 percent.
A study carried out here revealed that Brazil's Proalcool programme spent some three billion dollars a year on subsidies for the production of fuel alcohol based on sugar cane, thus indirectly stimulating sugar production and helping make the country the world's biggest exporter of sugar, and one of the leading producers, along with India and the European Union.
Since the Proalcool programme, aimed at replacing petroleum and its derivatives with fuel alcohol, went into effect in 1975, Brazil's sugar production soared from 68 million to 300 million tonnes a year.
Since 1994, Argentina's sugar industry - which produces less than two million tonnes a year - has been demanding that the government press Brazil to eliminate its subsidies.
In Argentina, the sector has suffered a crisis which forced it modernise and upgrade - and today, Argentina is an efficient producer, without subsidies, according to experts.
The memorandum of understanding signed at the summit in Rio de Janeiro "gave Brazil a preference, by allowing it a 10 percent reduction of (Argentina's) tariff, while ignoring the other two countries that make up the bloc, because Uruguay and Paraguay were not part of the understanding," Jorge Zorreguieta, with the 'Centro Azucarero Argentino' (Argentine Sugar Centre) told IPS.
"Furthermore, the law in effect in this country was ignored," he added.
Last year, sugar producers were successful in lobbying Congress to approve a law imposing a 23 percent average tariff on sugar imports from Brazil. Although the administration of President Carlos Menem vetoed the bill, it won the support of two-thirds of both houses of Congress, and went into effect.
The Committee of Experts on sugar met in Rio de Janeiro five days before the summit that ended last Friday. At the meeting, Argentina rejected Brazil's demands that the tariffs be brought into line with the duties paid within the bloc, and that it be paid economic compensation.
Argentina reiterated that it would respond to Brazil's request for overturning the law imposing the tariff once that country removed its subsidies.
Nevertheless, Di Tella and Lampreia signed a memorandum of understanding by which Argentina agreed to reduce the tariff by 10 percent through "all the necessary legal and administrative steps."
The sugar industry is up in arms, fearing that the tariff is in danger. The executive branch could once again seek to amend the law in Congress, issue an emergency decree ordering a reduction of the tariff, or seek a Supreme Court decision declaring the law unconstitutional, in order to meet Brazil's demands.
Through the memorandum of understanding, the two biggest members of Mercosur agreed, moreover, to outline - by next April - a timetable for the lifting of tariffs.
Brazil wants the bloc's common foreign tariff on sugar to be slashed to zero by the year 2001.
"Brazil today is the object of international attention because of its Proalcool programme," Zorreguieta pointed out. He said the fuel alcohol programme had triggered an internal crisis in Brazil that authorities were trying to "export" to the international market with their enormous surplus of sugar and alcohol - and the consequent crash in prices.
In Zorreguieta's view, the document signed by the two ministers in Rio de Janeiro is a gesture of bilateral understanding that cannot in and of itself neutralise the effect of Argentina's law.
He warned, nevertheless, that provincial governments, legislators, producers and workers should remain on the alert.