International Confederation of European Beet Growers
Ref. Ares(2016)4460059 - 17/08/2016
Ref. Ares(2016)5536038 - 23/09/2016
111/9 Boulevard Anspachlaan – B-1000 Brussels Tel: +32 2 504 60 90 – Fax: +32 2 504 60 99
[email address] – www.cibe-e
ON THE TRANSALTLANTIC TRADE AND INVESTMENT PARTNERSHIP (TTIP)
As the discussions between the US and the EU are ongoing, the European Beet Growers would like to express their
strong concerns on the potential negative impacts of the Transatlantic Trade and Investment Partnership (TTIP) on
the EU sugar beet sector.
CIBE asks the Commission to avoid any market access concession to the US on sugar and sugar containing
products as well as on ethanol.
Concessions on imports of sugar or sugar containing products are not justified
The opening of the European market to US imports of sugar
would represent a destabilizing factor
balanced EU market. European beet growers and the EU sugar industry have already undergone a drastic
reform of the Common Market Organization (CMO) in 2006. 150.000 farmers have abandoned sugar beet
cultivation as a result of the closure of 83 factories all over Europe. In this restructuring process, 22.000 direct
jobs have been lost, mostly in rural areas where sugar represented an important source of income and
livelihood. Moreover, the reform of the sugar CMO foreseen after 30th September 2017 will certainly have
further severe impacts on our sector. In particular, the abolition of market management measures of the EU
sugar market as from 1st October 2017 will put the market balance at risk. The TTIP should not lead to
further imbalances in the market
that would result in further sugar factory closures and reduction in beet area
in the EU (it is estimated that each 100 000 t of additional sugar imports per year would result ultimately in the
closure of 1 sugar beet factory in the EU). The Commission should avoid any concessions (tariff reduction
or tariff rate quotas (TRQs)) which could jeopardize the sustainability of the EU sugar beet sector.
The US sugar sector is highly regulated
; import tariffs and TRQs for sugar as well as price support are the
backbone of the US sugar policy defined in the Farm Bill. These measures are accompanied by a control of the
quantities which can be sold on the market (both for domestic sugar and third countries sugar), and by a loan
system in which the federal government operates as a safety net buyer. Market access concessions with such
policies in place will be detrimental for EU sugar beet growers
is a net importer of sugar
. Therefore, there is no justification for any market concession
asks the Commission to call for the application of the Net Exporter Clause,
stipulating that concessions should
only be granted for those sectors in which the US is already a net exporter. CIBE notes that the US has
implemented this clause in other trade agreements (e.g. US-Colombia, US-Peru and US-Morocco FTAs).
Moreover, the US administration has always excluded sugar and sugar products from bilateral negotiations
when it represented a risk for the US sugar sector (e.g. US-Australia FTA).
Furthermore, the entering into force of NAFTA provisions for sugar in 2008 has generated a structural
surplus in the US market
due to duty-free quota-free imports from Mexico. This situation leads to direct
interventions of the US Department for Agriculture so as to withdraw sugar from the US market through the
implementation of market management measures (swap operation)
that are highly questionable at a time where
the EU Commission disengages itself from the management of EU agricultural markets and of the sugar market
In such a context, the risk of triangular trade and swap
would be also high. Furthermore, the strict respect of
the current EU set of rules of origin for sugar and high sugar content products is of great importance
particular, the three following rules must be respected:
o Exclude that any kind of refining operation could confer the US origin.
o Avoid the possibility of cumulation for those countries that already have an FTA with the US in place.
o The rules on minimal operations and non-originating sugar must reflect the European approach, with no
concession to the NAFTA set of rules.
CIBE opposes strongly the direction that would relax the EU rules of origin so as to reconcile them with the
NAFTA rules of origin, to the detriment of EU sugar producers.
Every concession on sugar will erode even further the preferences granted to ACP/LDC countries
European Union is the reference market for many cane growers in developing countries. The loss of preferential
access to the EU market represents a serious threat to their income and to the viability of their production. This
is even more relevant as the EU has recently concluded several FTAs (Colombia, Peru, Central America, the
Ukraine and Canada) that include TRQs for sugar or sugar products which already put pressure on the imports
from ACP/LDC countries.
Finally, the productive structure of the US sugar sector is totally different to the one in place in the EU
is based on large commercial farms that resort heavily to the cultivation of GM sugar beet (90% of the market).
Moreover, in the case of sugar cane, monoculture is the norm, while the EU is implementing a reformed CAP
which promotes diversification and rotation as the cornerstones of greening measures, which put
additional constraints to EU farmers
CIBE reiterates that market access concessions on sugar negotiated in FTAs are detrimental for the EU beet
sugar sector sustainability and considers that negotiations on sugar must be restricted to the WTO forum.
It is interesting to note that the American Sugar Alliance (ASA) has also taken a similar position to the CIBE and
CEFS position. In answering a public consultation on the issue the ASA states that: “Given that the U.S. and the EU
are both large net importers of sugar and that both have made extensive market access commitments in various
trade agreements to the benefit of developing countries, there would appear no legitimate commercial reason to
negotiate further market opening on sugar between the two.”
Concessions on imports of ethanol are not justified
The US is the world’s largest ethanol producer
(53 billion liters in 2011) and by far the biggest exporter
(4.5 billion liters in 2011). Any opening to US subsidised ethanol exports would undermine the competitiveness
of a strategic sector for the EU. The European ethanol sector, and especially the renewable ethanol sector, has
invested heavily and is providing affordable raw material for fuel blends and many other applications. In
addition, the EU Institutions are currently discussing reduced targets and higher sustainable criteria for
bioethanol in the EU. The competition that the sector would face in the event of opening up of the EU market to
the US imports would jeopardize the investments made so far to build production capacity and improve
efficiency. The EU would favour a supply line from third countries to the detriment of a local, sustainable and
reliable production: this is simply unacceptable.
There is a further potential risk of distortion of competition
. Indeed, the EU Institutions are discussing the
future of biofuels from crops in the Renewable Energy Directive: the introduction of stricter criteria in terms of
sustainability are on the table while the US has adopted a different approach for these biofuels and considers
EU criteria as non-tariff barriers which should be eliminated. This US approach should be strongly opposed.
The negotiation should be carried out with the aim of preserving a key European sector
that provides the
renewable fuel and energy that the EU needs to fulfill its 2020 targets
It is also to be noted that the energy costs
in the US are decreasing significantly (development of shale gas in
the US) leading to a competitive advantage vis-à-vis EU sugar and ethanol producers.
US Sugar and Ethanol production, policy and exports to the European Union
1 – US Sugar production, policy and exports to the European Union
US Sugar production and exports
The United States is the fifth largest sugar producer and fifth largest sugar consumer in the world. As
shown in Graph 1, in recent years the net importer nature of the US sugar market has increased. US
sugar production is obtained from both sugar cane and sugar beet; the proportion amongst the two
feedstocks has remained constant over the years, with a predominance of beet sugar over cane sugar
(respectively 60% and 40% of the production).
Graph 1: US Sugar Production by feedstock and consumption – period 2004-2011 –trsv (tonnes raw sugar value)
Source: ISO Sugar Yearbook 2012, Eurostat
Despite being a net importer, the US exports a certain quantity of sugar to the EU. According to the
EUROSTAT database, in 2011/12 the US exported to the EU a total of 338.57 tonnes. In the period 2007-
2012, average US exports to the EU amounted to 347 tonnes per year (Graph 2). The repartition sees a
predominance of white sugar (326 tonnes) and only a very modest quantity of raw sugar for direct
consumption (12.55 tonnes).
As far as high sugar content products are concerned, the quantities imported are slightly more significant.
In 2011/2012, the US exported a total of 7 334 tonnes of CN 1704 and CN 1806 combined. Cocoa and
chocolate products represented 90% of the imports. Graph 3 shows how the quantities exported by the
EU to the US and by the US to the EU are comparable and remained constant up to the 2009/2010
campaign, with a predominance of US exports to the EU. In the last two marketing years, US exports to
the EU have been increasing each year.
Graph 2: US exports of sugar to the EU by marketing year - Period 2007-2012 –trsv (tonnes raw sugar value)
Graph 3: US and EU exports of Confectionery products marketing year – Period 2007-2012 – Tonnes
: The US is a net importer of sugar. The US has implemented the Net Exporter Clause
in other trade agreements (e.g. US-Colombia, US-Peru and US-Morocco FTAs). Moreover, the US
administration has always excluded sugar and sugar products from bilateral negotiations when it
represented a risk for the US sugar sector (e.g. US-Australia bilateral FTA). The European Union
should invoke this clause
which stipulates that only those sectors in which the counterpart of an FTA is
net exporter should be included in the agreement. Moreover, given the small volume of sugar traded and
the high level of consumption in both areas, the eliminations of tariffs on sugar will bring little if any
benefits to the EU sugar producers. In contrast, liberalization would raise the difficult issue of rules of
US sugar policy
The US sugar industry has enjoyed trade protection since 1789 when Congress enacted the first
tariff against foreign-produced sugar. Since then, the US government has continued to provide
trade support and protection for its domestic sugar industry.
The framework for the current US sugar program has its roots in the so-cal ed “Farm Bil ” enacted
in 1990. The farm bill is the primary vehicle for setting US sugar policy and that policy is currently
based on three main pillars: price support through preferential loan agreements, domestic market
controls and tariff-rate quotas. The 2008 US Farm Bill has been recently extended by the US
Congress to 30th September 2013, after the House of Representatives failed to pass the bill on the
20th of June, notwithstanding the green light from the Senate.
The US Department of Agriculture (USDA) provides loans to sugarcane and sugar beet producers
and processors that guarantee a minimum price regardless of the market conditions. At the end of
the loan term (generally 9 months), sugar producers and processors make one of the two
1. Turn over to the government the sugar they produced as payment for the loan, or
2. Sell their sugar on the market if the going price is higher than the USDA loan amount
3. Sugar Producers benefit from the guarantee of 85% of the market, in addition US
government is entitled to buy sugar and resell it to ethanol producers in times of market
Currently, the loan rate is US$ 18.75 cents per pound for raw cane sugar and US$ 24.09 cents per
pound for refined beet sugar.
Domestic Market Controls
USDA allocates annually a share of the anticipated US sugar market to sugar producers. This
allotment basically determines the amount of sugar an individual company is allowed to sell that
year. However, these allotments can be, and often are, adjusted based on harvest conditions.
If companies produce more sugar than their allotments permit, they are forbidden to sell it.
Instead, they must store the surplus sugar at their own expense until they have permission to sell
in the future. The 2008 Farm Bill requires that these allotments be at least 85% of domestic sugar
Marketing loans and marketing allotment programs are contingent on the use of feedstock
produced in the US.
Tariff-Rate Quotas (TRQs)
US sugar imports are strictly controlled by TRQs. TRQs are the amount of sugar that can enter the
country from abroad at a low or zero duty. The amount set aside for import under TRQs must
meet US obligations to the World Trade Organization (WTO) – currently a minimum of 1,117,195
tons of raw sugar and 22,000 tons of refined sugar. The 2008 Farm Bill also allows USDA to
increase sugar TRQs on April 1 of each year if a shortage is expected. The final volume of these
TRQs is established annually by USDA, so as to be adjusted to the US domestic market. The US
Trade Representative (USTR) allocates the TRQs among countries.
Today’s TRQ allocation among 40 countries is based on US sugar trade as it existed from 1975 to
1981. Sugar production and markets have changed substantially during the past 30 years, yet the
US sugar quota system does not reflect that evolution.
For 2012, the US allocated a quota of 155,634 tons of raw cane sugar to Brazil
which will pay
an import duty not exceeding 1.4 cents per kilogram. Additional sugar imports above TRQ levels
are not practical or economical under normal market conditions due to stiff over-TRQ tariffs.
Sugar in the NAFTA (North American Free Trade Organization)
The entering into force of NAFTA provisions for sugar in 2008 has generated a surplus in the US
due to duty-free quota-free imports from Mexico. The US market cannot be analysed without
taking into account the sum of the US sugar production, the imports from Mexico and imports
from third countries under TRQs
. Graph 4 shows that the surplus generated in the last 4 years,
compared to the sugar consumption in the US, has increased significantly. The total surplus estimated for
the 2013/2014 marketing year will be around 700.000 tonnes. Moreover, the ratio between the TRQs
imports and Mexican imports has changed in last two MY years. Mexican sugar now represents 63% of
the total US imports while the share of TRQs has decreased to 37%. It is to be noted that the US has
increased significantly its isoglucose (HSFC) exports to Mexico. Graph 4: US sugar surplus and share of imports – Million Tonnes – period 2008-2014
This surplus situation has recently generated a reaction from the US Department for Agriculture (USDA),
which has directly intervened in the US sugar market for the first time in last 13 years. USDA has
272.160 tonnes of sugar form the market and made it available for refiners who will buy it in
exchange for credits under the refined sugar export program. The operation will cost around US$ 38
million and is deemed necessary to avoid default on the re-payments of manufacturers’ loans. With this swap operation,
the USDA artificially made internal sugar more attractive to the refiners if compared to
external sources; internal prices will increase and the already saturated world market will have to deal
with increasing quantity of sugar.
Conclusion: the North American area is facing a structural sugar surplus, driven by the increasing
production both in the US and Mexico necessitating the intervention of the USDA
. An opening up of
the EU market would inevitably expose the EU sugar sector to the effect of highly questionable swap
practices from the US. The recent USDA intervention is a good example of the response to the pressure
that the surplus is putting on US prices and the growing necessity of political intervention to put in place
measures to ease this pressure on internal prices. In this context, the strict respect of EU rules of
origin remains also crucial
: refining should in no case confer the origin, cumulation should be kept to a
minimum and the percentage of non-originating sugar in high sugar content products should be strict and
reflect EU rules of origin structure.
2 – US ethanol production, policy and exports to the European Union
The United States is the largest producer and consumer of ethanol in the world
. Corn ethanol has
been produced in the US for more than 30 years. US distilleries generate nearly half of all ethanol
produced around the globe or 580 million hectolitres in 2011 (against 43 million hectolitres in the EU in
Graph 5: US Fuel Ethanol production and consumption – period 2004-2011 – Millions of hectoliters
Source: ISO Ethanol Yearbook
The US ethanol export availability has constantly increased in the past ten years
. The US is
currently the world’s largest ethanol exporter. The production/consumption ratio has passed from 0.96 in
2004 to 1.08 in 2012.
Graph 6: US ethanol exports to the EU – period 2007-2012 – Millions of hectoliters
US exports to the EU are already significant and represent the majority of total EU ethanol
. The European Commission, in its annual ethanol balance, communicated a level of total imports
to the EU of 15.720.406 hectolitres1 in 2011; imports from the US represent 10.550.806 hectolitres, i.e.
67% of the EU’s total ethanol imports. At such level the sustainability of the EU industry was put at risk.
Graph 6 represents the evolution of ethanol exports from the US to the EU in the period 2007 to 2012.
In December 2012, the EU Commission proposed the necessary measures by adopting
antidumping duty on bioethanol, ratified by the Council in late January 2013
2. As a result, ethanol
imports from the US dropped by 45%, reaching just above 5 million hectolitres.
US Ethanol Policy
The Renewable Fuels Standard (RFS2),
created by the 2007 Energy Independence and Security Act
(EISA), regulates the domestic consumption of biofuels. It requires adding continually increasing volumes
of renewable sources (corn ethanol, advanced biofuels, cellulosic-ethanol) into the country’s fuel supply –
growing from nearly 490 million hectolitres (13 billion gallons) in 2011 up to 1 360 million hectolitres (36
billion gallons) by 2022.
In May 2011, the Open Fuel Standard Act (OFS)
was introduced to Congress with bipartisan support.
The bill required that 50 % of automobiles made in 2014, 80 % in 2016, and 95 % in 2017
manufactured and warranted to operate on non-petroleum-based fuels, which included existing
technologies such as flex-fuel, natural gas, hydrogen, biodiesel, plug-in electric and fuel cell.
the rapid adoption of flexible-fuel vehicles in Brazil
and the fact that the cost of making flex-fuel vehicles
was approximately $100 per car, the bill's primary objective was to promote a massive adoption of flex-
fuel vehicles capable of running on ethanol or methanol fuel in the US
From the 1980s until 2011, domestic ethanol producers were protected by a 54-cent per gallon
, mainly intended to curb Brazilian sugarcane ethanol
Beginning in 2004, blenders of transportation fuel received a tax credit
for each gallon of ethanol they mix
with gasoline. Historically, the tariff was intended to offset the federal tax credit that applied to ethanol
regardless of country of origin.
Indeed, up to 2011, blenders received a 45 cent per gallon tax credit
, regardless of feedstock; small
producers received an additional US$0.10 on the first 15 million US gallons; and producers of cellulosic
ethanol received credits up to US$1.01 per gallon. Tax credits to promote the production and
consumption of biofuels
date to the 1970s. These credits were based on the Energy Policy Act of 2005,
the Food, Conservation, and Energy Act of 2008,
and the Energy Improvement and Extension Act of
As the agency implemented RFS2 and as the targets of the RFS2 were not achieved mainly because of
the non-availability of cellulosic-ethanol, the EPA (Environmental Protection Agency) determined that sugar cane ethanol cuts carbon dioxide emissions by more than 60 %
and designated it
an Advanced Renewable Fuel
. This designation puts sugarcane ethanol (imported from Brazil) in an important category of superior biofuels that will make up 79.5 billion litres (21 billion gallons) of
the fuel supply in the United States by 2022
– an amount equal to about 15 percent of today’s gasoline
market. Sugar cane ethanol is the only fuel currently produced at commercial scale available to fulfil the
advanced non-cellulosic volume of the RFS2.
It is to be noted that the EU imposes higher standards and does not consider sugar beet ethanol or sugar
cane ethanol as “advanced biofuels” although the EU also considers that both cut GHG emissions by
1 For ethanol
flows the following CN codes have been considered:
2209.19.10: Tert-butyl ethyl alcohol
2207.10.00: Undenaturated ethyl alcohol of actual strength higher than 80%
2207.20.00: Denaturated ethyl alcohol and other spirits of any strength
2208.90.91: Vinegar and substitute from acetic acid in container smaller or equal to 2 liters
2208.90.99: : Vinegar and substitute from acetic acid in container bigger than2 liters
- 3824.90.97: Chemical products and preparations from the chemical industries including those containing mixtures of natural
2Legal text of the Council decision: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2013:049:0010:0028:EN:PDF
more than 60%3. When discussing compatibility/convergence of regulations and standards between the
US and the EU it would be unacceptable that sugar cane ethanol mainly imported from Brazil by the US
would be considered as advanced biofuel by the EU; this would represent a major risk for the EU
Moreover, the probable introduction by the EU of stricter sustainable criteria for biofuels production from
crops (see current negotiations on the Renewable Energy Directive – RED - and on the Fuel Quality
Directive – FQD) will further increase the gap between the two US and EU approaches. The US
administration has already informed the EU Commission that it considers the future sustainability criteria
of the RED as non-tariff barriers which should not apply to US corn ethanol: this approach is not
acceptable and must be strongly opposed by the EU negotiators. The EU must remain extremely
vigilant so as not to double penalize the EU bioethanol sector by imposing stringent standards in
the EU and less stringent standards for US ethanol imports.
The respect of the RFS2 remains an issue; however, it is likely that it will remain unchanged. In 2013, in
addition to the previously mentioned provisions, US and Mexican officials have been discussing the
possibility of dealing with the structural surplus of the US-Mexico Sugar market (see Graph 4) by selling
Mexican sugar to the US ethanol producers who in turn will re-export the ethanol back to Mexico
This operation is yet another way to maintain the objective of RFS2 (and to keep internal sugar prices
high in the US by managing sugar imports from Mexico).
Conclusion: The US is the world’s biggest ethanol producer and ranks amongst the top exporters,
in a situation of high support from the government
. The US sugar policy also establishes
interconnections between sugar market and ethanol market in the US. The US government has the
possibility of activating a safety net when the sugar prices are under pressure by buying sugar from beet
and cane processors and making it available for ethanol producers in exchange for exports rights, leading
to subsidized exports. Moreover, the mandatory blend with gasoline guarantees an increasing internal
demand in the US for ethanol that sustains price levels. Finally, the EU Institutions are currently
discussing reduced targets and higher sustainable criteria for bioethanol in the EU with the risk of
distortion of competition between EU bioethanol and US bioethanol. In this context, the EU cannot
accept to further open its market to US ethanol
. The EU bioethanol sector operates in extremely
different conditions, and is still involved in heavy investments to increase capacity and efficiency. The
opening up of the ethanol market will certainly lead to an increase of the already high imports from the
US. This will reduce the market share for the EU industry, jeopardize its investments and put its
sustainability at risk.
3 Advanced biofuels in the EU RED are produced from other sources than crops, such as seaweed or certain types of waste.