EU smashes 40 years of sugar protectionism

Under the deal, EU farmers will be compensated for 64.2 percent of their losses and have direct access to a €7.5 billion restructuring fund.

The European Commission has also bound itself to monitor sugar imports, with a view to slapping safeguards on trade if overseas producers suddenly flood Europe.

The decision relaxes almost 40 years of protectionism for EU sugar beet farmers and comes in response to a World Trade Organisation (WTO) ruling in October.

Agriculture commissioner Mariann Fischer Boel said after the talks "Now I know what it's like to enter the hornets' nest that is sugar reform."

Formal agreement in new year

Poland and Greece were the only two countries strongly opposed to Thursday's informal deal, which was reached without a vote after UK agriculture minister Margaret Beckett gazed around the room at around 15:00 CET and declared the meeting a success.

"The rest were not 100 percent happy, but there was widespread support in any case, enough for the presidency to say 'I see we have agreement'," a commission official said.

The formal qualified majority vote will follow in early 2006 after the European Parliament issues its non-binding opinion in January, but experts said the vote will mirror Thursday's accord.

Poland reportedly asked for a 10-year phase-in of the price cuts and a pause in talks until the European Parliament has spoken.

The Greek objections were less drastic, with a Greek spokesman saying "the problem is that the price cut would be 20 percent already in the first year."

Good omen for Hong Kong

EU trade commissioner Peter Mandelson said the deal sends out a positive political message ahead of WTO talks in Hong Kong next month.

"The deal is good news for Hong Kong. It removes a cloud and Europe has made an important contribution in getting this out of the way," he indicated.

But European sugar beet farmers fear the move will destroy small businesses in new member states, which cannot compete with corporate giants such as Germany's Sudzucker or overseas players.

"We think it will be difficult for our farmers to sell at this price," the European farmers' association, COPA, told EUobserver. "If you decrease the price, only the most competitive people can stay in business."

COPA's arable crops head of unit, Marie-Christine Ribeira, said farmers welcomed direct access to the restructuring fund and the commission's pledge to monitor imports though.

She indicated that further farmers' protests in Brussels are unlikely, but added that COPA will keep pressing the commission for "clear transition rules."

A spokesman for a large European sugar producer pointed out that "our profits will also fall."

Meanwhile, fair trade NGO Oxfam slammed the new accord for its disregard of small growers in developing countries.

"The commission has hurled money at its member states to convince them to sign up, but has abandoned some of the poorest countries to destitution," Oxfam's Brussels head, Luis Morago, said.