It’s been a year now; May 1st marked Estonia’s first anniversary as full-fledged European Union member nation. And though there has been quite some justified grumbling, few can suggest from an economic perspective that membership does not have its rewards. Visitors to the fatherland are advised, for example, with pride that a stretch of highway in Ida-Virumaa is an euroroad, up to EU standards, paid for by the EU. That road may not have been built or resurfaced had those monies not been made available from Brussels.

Sure, the Constitution as it is being foisted upon the EU community by Discard, whoops Giscard d’Estaing is an unpleasant document threatening sovereignty and local practice of custom and law. Yet it looks more and more as if the French themselves will give the Gallic shrug and vote Non to the proposed treaty later this month. And if they turn pusillanimous at the last moment then John Bull will nix the compact.

Hey, it could even be the Estonians that put the kibosh to this collusive concordat that removes far more freedoms than it purportedly will provide. The Ansip government agreed on one of their binding coalition issues to allow the Estonian people to vote on the proposed EU Constitution, rather than have it be rubber-stamped by the Riigikogu. And there are another 20 EU member states that have not decided the issue; it only takes one member state to queer the works. The more information about the treaty that gets made public the better the likelihood that it will be rejected, somewhere.

Still, the selling point for the newer EU countries for membership in the Union was economic. The Baltic States, Latvia, Lithuania and Estonia have benefited the most. The European Commission predicts their economies will grow 7.2%, 6.4% and 6% respectively by year-end.

They have also strongly benefited from EU direct aid. As EUObserver.com noted while marking the anniversary of expansion, Polish farmers who complained loudly and suspiciously about the EU before membership have become rather quiet as the cash flows in from Brussels.

Up until the New European economies catch up to Old Europe transfer payments and support will help the poorer yet equal nations look after among other things their infrastructure. As City Paper recently pointed out, the EU’s budget will see the doling out of some 80 billion kroons from Brussels to Tallinn, or @ 5 billion euros between now and 2013. Sweeter by far than what the Estonians will have to pay out in, say, sugar hoarding fines.

As has been well documented, the sugar fine imposed on Estonia by the EU’s nabobs lacks free market logic. Estonians bought up cheap sugar before EU member laws made that illegal, further; much of the alleged hoarding was by individuals, not enterprises or governments. How do you punish a state for the legal acts of its citizens, as all sugar purchases were legal before May 1, 2004?

The EU’s insistence on such legislation is what makes the proposed Constitution dangerous for small nations like Estonia. Having Germans or Belgians tell you what or how much of what one can buy is ludicrous. Especially in view of the fact that, as the WTO asserts, the European Union itself is guilty of price fixing in the sugar market.

On April 28 a World Trade Organization panel ruled that sugar produced and exported from the EU benefits from illegal subsidies. Now the EU has to face the music, being bound by international agreements to not export subsidized refined sugar above a certain level. The WTO has determined that the EU’s sugar regime is guilty of reducing the world price of sugar by subsidizing exports through subsidies on local EU production. The world’s largest sugar producer, Brazil, along with Thailand and Australia have been sour on this practice for some time, and took up their gripe (and, of course, gripe water) last September.

This all is a throwback to colonial times. Basically, what Europeans are doing is importing raw sugar from its former colonies and re-exporting it after refining it. However, what’s good for Dick is bad for Harry, at least in the logic of the eurocrats. Until the WTO stepped in, the EU had no real reason to change this practice.

They now are faced with perhaps having to cut the price of refined white sugar by a third as well as a similar cut for the price paid to farmers for actual sugarbeet.

This would bring sugar prices into line with what Estonians actually were paying on the real, read free and not controlled or subsidized market before May 1. And if this reform takes place, what will happen to the present fine, still hovering over Estonia, and still not finalized as to how much the final fine will be?

Add to this the fact that the EU is making noises about demanding fines from Estonia for having surplus stores of skim-milk powder and butter, and the whole agricultural subsidy issue becomes ludicrous. Agricultural subsidies are nothing new, and perhaps this is why the EU is reluctant to reform their own practices without having other developed countries do the same.

The current “sugar regime” deal expires on June 30, 2006. Brussels has a year or so to conform to WTO’s ruling. As a matter of fact, the Doha Development Round within the WTO expects to see developed countries such as Japan and the United States reduce their agricultural subsidies. Enforcement, however, is going to be difficult, and proof of compliance to international agreements that much harder to ensure.

The role of the Estonian government in all this may be minimal abroad, but within, it seems wisest for the next decade to follow the lead of Atlantic Canada. Pay the higher rates for luxury goods (though refined sugar certainly should not fall into this category), if necessary; after prolonged negotiation pay some extorted tax, but keep your place in the line up at the hand-out table for the next decade.

Not only may such strategy help pay for improvement of infrastructure left (still) in sorry disrepair by the decades of Soviet occupation, but the best thing about such an arrangement is that the fines are a one-time deal, while the transfer payments will continue for years. Perhaps time to say — what a sweet deal! — rather than aw, sugar.

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