The European Union have agreed on a major overhaul of its sugar subsidy programme, cutting prices by 36 percent in a landmark deal that it says would strengthen its hand in upcoming world trade talks.

EU Agriculture Commissioner Mariann Fischer Boel told reporters the agreement reached after three days of talks "complies completely" with World Trade Organization rules.

"The importance of this meeting must also be seen in the light of the upcoming WTO meetings in Hong Kong. It has been essential for the Commission to have a proposal in the pocket. If we had no proposal in the pocket we would have nothing to defend and therefore I am quite sure we... or I know that I'll be in a much better position for the negotiations in December," said Boel.

Under the old system, production was supported by generous EU subsidies and import tariffs, all of which will be phased out over a four-year period starting in 2006.

EU sugar prices are more than three times higher than the global market rate and are protected by hefty import tariffs. Brussels also pays out export subsidies to get millions of tonnes of sugar a year off its market.

A successful WTO challenge by Australia, Brazil and Thailand has forced the EU make cuts in its subsidy system before the end of next May.

As a result of the reforms, the 25-state bloc will become a net importer of sugar, most of which will come from poor African countries.

(CRI.com November 25, 2005)