At the recent World Summit in Johannesburg, delegates were handed sachets of sugar with labels that read: 'Warning: Devastating to African farmers', 'Made in Europe, dumped in Africa' and 'Less Sweet than it tastes'. The sachets were produced by the British charity Oxfam, with the intention of highlighting the problem of EU sugar subsidies and the crippling effect they are having on African agriculture.

The sugar inside the sachets was British and sold at 632 Euro a tonne, a price guaranteed by the European Union, which dwarfs the world market rate of Euro 184. This alarming discrepancy, which is maintained at the expense of the European taxpayer, effectively prohibits the expansion of Swaziland's sugar industry into markets in which they could otherwise compete.

The problem of sugar subsidies resonates deeply into Swaziland's economy and society. Sugar is the country's main agricultural earner, accounting for 67% of agricultural production, 20% of GDP and almost 100,000 jobs - more than any other industry. EU subsidies restrict the significant export potential of Swazi producers by pricing out competition and protecting the European market. In addition, Europe produces about a third more sugar than it can sell domestically and as a result encroaches on African domestic markets by selling the surplus at a cheap rate abroad. The regime is enforced by world trade laws that jealously guard Europe's share of the world sugar market - allowing them to continue a policy of brazen protectionism, whilst at the same time forcing poorer countries to open up their markets to foreign competition.

In July, during the official visit of King Mswati III, the Mozambican President Joaquim Chissano called for a vigorous campaign to combat smuggling of sugar into Mozambique from Swaziland and other neighboring countries. The problem, which is putting Mozambique's own sugar industry under threat, highlights the acute difficulties facing many sugar producers in Swaziland. Since the mid 1980s and the depreciation of the currency, Swaziland's sugar industry has been becoming more and more competitive. However, with the domestic market saturated and little hope of increased quotas from the EU or the USA, there are few opportunities for expansion and producers are under strong pressure to sell extra sugar by whatever means available.

The case underlines the double standards in the world trade of sugar - whilst the EU can sell its surpluses legally, countries like Swaziland have no option but to either restrict production, dispose of surpluses or export illegally. The EU's position as the world's number one sugar producer is maintained despite the fact that Southern Africa produces sugar almost twice as efficiently. Mandla Hlashwayo, the Human Resources Manager of the Ilovo Ubombo Sugar Mill in Big Bend is deeply concerned at the EU sugar regime and its effect on the country. "Despite the sophistication and huge competitive advantages of European economies in virtually every sphere, the EU fights tooth and nail to preserve their privileged position in the sugar trade." The system, it seems increasingly clear, exists solely to protect European interests. As a statement from the European Sugar Manufacturers' Association published in Oxfam's recent report on sugar explains - the regime "preserves the interests of all parties concerned. It was deliberately designed to this effect."

European trade rules further damage the Swazi sugar industry by placing high tariffs on sugar based products made outside the EU. This effective ban on 'value-added' sugar processing industries exporting to the EU discourages the growth of these industries in Swaziland and consequently makes the economy more reliant on raw sugar exports and vulnerable to market fluctuations.

European sugar quotas were altered slightly in July 2001 through changes in the European Sugar Protocol and the introduction of the 'Special Preferential Sugar arrangement' (SPS). Some Southern African producers gained considerable extra income from the additional duty-free sugar quotas opened for the 'least developed countries' such as Tanzania, Mozambique, Malawi and Zambia under the Everything But Arms Initiative. These developments, however, came at the expense of non-least developed sugar producers like Swaziland and Zimbabwe, who lost access to EU markets under the SPS arrangement. Further reforms are planned which could hurt Swaziland further. The EU intends to replace some quotas with an increase in direct aid to EU sugar farmers, which will almost certainly result in a sharp fall in income earned on raw sugar exports to the EU.

Despite these ominous developments, there does appear to be some realization of the inherent injustice of subsidies from EU commissioners. European Commission spokesman Michael Curtis said "We realize we have an issue on subsidies and are taking steps to address these." The EU's Commissioner for Development and Humanitarian Aid Paul Nielson said the EU was committed to ensuring there would be a reduction in trade-distorting farm subsidies - "Negotiations to fulfill this commitment and to establish how big the cuts should be should have been completed in time for the new commitments to be tabled before the 5th WTO ministerial in September 2003."

Such promises of change should, however, be treated with suspicion - reform of the Common Agricultural Policy for example has been in the pipeline since 1995. The EU itself is increasingly realizing its position on sugar is unsustainable, yet its willingness to push through any meaningful change is kept in check by the powerful monopolies that run the European sugar industry. For Swaziland, Europe's continued intransigence continues to damage the sugar industry by restricting growth, threatening the domestic market share and leaving the economy vulnerable to market fluctuations. For some, any reform will be too late - the Sugar Daddy factory, for example, which produced sugar confectionary in the Matsapha industrial region, was forced to close as a direct result of an increase in cheaper imports from Europe. The manager of the factory was clear that the EU's sugar regime was largely responsible for the loss of some 300 jobs. "We simply can't compete with the incredibly keen prices they are offering - they are dumping their products here and it costs us business. We don't want special favours - just the level playing field they keep talking about."