ECONOMY

EU renews stiff tariffs on Serbia, Montenegro over sugar fraud

BRUSSELS (Reuters) – The European Union’s six-month ban on special sugar trade concessions for Serbia and Montenegro, aimed at combating fraud, will apply from August 8, the EU’s official journal said yesterday. The suspension of the preferential trade arrangements, however, will enter into force today, giving member states just over a week to adopt the rules nationally. The publication of the legal text in the EU’s official journal rubber-stamps the Commission’s decision from earlier this month to extend a three-month-old ban for a further six-month period over continuing fraud fears. The initial ban was due to run out on August 8. No progress «There has been no significant change in the situation in Serbia and Montenegro with regard to the deficiencies found in their system of certification and control of the preferential origin of sugar, despite the ongoing efforts of the authorities,» the notice’s text read. «Moreover, a reasonable amount of time is needed for the situation to be redressed,» it added. The EU suspension was designed to halt fraudulent sugar exports from the two Balkan states by slapping the EU external tariff – a duty of between 33.9 and 41.9 euros per 100 kilograms – on previously zero-duty exports. The Commission made its first move to crack down on Balkan sugar fraud in March, scrapping subsidies for EU exporters sending sugar to Albania, Croatia, Bosnia-Herzegovina, Serbia and Montenegro and the Former Yugoslav Republic of Macedonia. This export subsidy suspension will continue for the 2003/2004 sugar marketing year. The EU implemented the two measures to stop triangular trade where EU sugar was being sold to the Balkans with export subsidies and then re-entering the 15-nation bloc duty-free. Balkan cane sugar The special deal, which allows western Balkan countries to export their sugar production to the EU free from duties and quotas, was launched in 2001 to help the region’s war-damaged industries recover from years of conflict. But two types of fraud were quickly detected: an unusual rise in sugar exports and imports between the two regions and the discovery of cane sugar in shipments from the Balkans where only beet sugar is produced. Suspicions have long been rife that some Balkan dealers have sold sugar under the deal at around $600 per ton, by re-exporting material bought on world markets at around $200. This practice has helped destabilize local markets in Greece, Italy and Austria. However, on an EU-wide scale, the quantities involved are insignificant. European Commission figures show that in 1999, the EU imported no sugar from Croatia. The figure was 600 tons in 2000, jumping to 28,000 tons between January and October 2001. EU exports to the region also increased, with Serbia and Montenegro trebling EU sugar imports between 1999 and 2001. Croatia managed to escape the second set of sanctions because its customs administration was seen as better prepared to fight fraud, according to EU officials.