ECONOMY

Croatia seeks to keep special sugar trade status with EU

ZAGREB – Croatia will seek to preserve its preferential position in sugar trade with the European Union in pending talks with Brussels officials, a senior Farm Ministry official said yesterday. The EU recently asked to negotiate import quotas on sugar with Croatia which, like other western Balkan states, has duty-free access to the EU sugar market. In February the EU imposed quotas for Serbia and Montenegro, Albania and Bosnia. «Croatia and (the Former Yugoslav Republic of) Macedonia (FYROM) are in different position as they have free trade agreements with the EU. It is not common practice to backtrack from the agreed preferentials and we think that no limits on our sugar export to EU should be imposed,» Miroslav Bozic, assistant agriculture minister, told Reuters. Croatia is an EU candidate, hoping to start membership talks this year, while FYROM has applied for candidacy. The European Commission decided to revise the sugar trade regime after unlimited access to the EU market led to a surge in sugar imports from the western Balkans in the last few years, from virtually zero in 1999. It said that such measure would force those countries to supply domestic needs with locally produced sugar rather than send their sugar production to the EU and cover domestic demand with cheaper imports from third countries. «We do not yet know what quota will be proposed to us. The EU only informed us that they would like to start talks on that issue as soon as possible and it is now up to the government to take a position,» Bozic said. Keeping production high Under the new quota scheme, which should take effect from July 1, Albania will get an annual sugar quota of 1,000 tons, Bosnia 12,000 and Serbia and Montenegro 180,000 tons. «The EU is set to reform sugar policy, which will include lower production quotas, and they would like to limit sugar import from this region,» Bozic said. He said Croatia was aware it would eventually be subject to production quotas as a future EU member but any reduction in production and exports to the EU market at the moment would be damaging for its sugar industry. «Sugar is one of our most important exporting products, but our output covers below 1 percent of the EU sugar market. We believe that legal and economic arguments are on our side,» Bozic said. «In addition, we want to keep the current levels as it will be a basis for talks on sugar production quotas during the accession negotiations,» Bozic said. Croatia has three sugar plants that produce 215,000 tons of sugar a year. They expect to export 170,000 tons to the EU this year, which is worth a third of the former Yugoslav republic’s overall agricultural exports. Bozic said Croatia would be firm in ensuring that EU sugar sold with subsidies would not be shipped back duty-free into the EU. Such a fraud, discovered in 2003, prompted the EU to scrap duty-free imports from Serbia and Montenegro for 15 months.