Latvia prepared to sue EU over sugar reform

  • 2006-07-05
  • From wire reports
RIGA - After concluding that the European Commission-mandated restructuring of the sugar industry is impossible to carry out, Latvia's two sugar producers have decided to sue the commission, Agriculture Minister Martins Roze announced last week.

In the words of Roze, who met with the directors of both the Jelgava Sugar Mill and the Liepaja Sugar Mill, "Having assessed all the possibilities, we have decided to sue the EC and legally change the regulations."
Both the government and the mills are particularly irked by the EU requirement that all sugar producers who agree to undergo restructuring pay a deposit equivalent to 120 percent of monetary compensation. Thus should the Jelgava mill opt to mothball its production facilities, it would have to pay 32.8 million euros, while Liepaja would have to pay 19.5 million euros.

Likewise, if the sugar mills reject the EC-mandated quotas and continue to operate at their own risk, Jelgava will have to pay 11.4 million euros and Liepaja 6.8 million euros, a ministry spokesperson explained.
"The restructuring demands are absolutely impossible to carry out," Janis Blumbergs, chairman of the Jelgava plant said. "We crunched the numbers and know precisely that we can't make that kind of deposit."
Roze said that the state could theoretically guarantee the deposits for both mills, though this would widen the budget deficit, exactly what Latvia's government is trying to avoid in its struggle to control inflation and prepare for introducing the euro.
For this reason, Latvia is prepared to object to the EU plan and consider turning to the courts, Roze said.

Mill operators realize that litigation will have little effect in the end, but as Blumbergs explained, "At least this will give us a chance to state our case loudly and clearly and show the absurdity of the new rules."
The mill restructuring is part of the EU's plan to overhaul the sugar industry, which is heavily subsidized and widely believed to be ineffective.