Monday, 19 July 2004

TRADE : Caribbean Bitter at EU Sugar Reform

by Peter Richards

PORT OF SPAIN (IPS) - Caribbean sugar producers are growing bitter at their treatment at the hands of other producer nations worldwide, with officials pointing an accusing finger at Europe for the latest problem confronting the sector.

Already soured by the decision of Brazil and Thailand to mount a challenge at the World Trade Organisation (WTO) of the preferential treatment afforded their sugar on the European market, the Caribbean sugar industry estimates that it will lose millions of dollars as a result of Europe's decision to revise its existing sugar protocol.

On Wednesday (July 14) , the European Commission (EC) outlined changes to its sugar regime that it says will cut support for its own farmers -- a demand of developing countries who are insisting on reform of global trade rules -- while maintaining preferential access for producers from the developing South.

But it will eventually reduce the price it pays sugar producers from the Caribbean and other developing countries by more than one-third.

EC officials said they were prepared to initiate structured talks with Caribbean officials ”in order to consider the manner in which the European Union can best assist them towards restructuring towards the goal of competitiveness.”

”These talks would also take into consideration efforts to diversify the economies of the least competitive nations. As a result, the commission will come forward with an action plan before the end of 2004 in order to define appropriate accompanying measures,” they added in a statement.

But Caribbean governments and sugar industry officials have rejected outright Europe's unilateral decision to revise the sugar protocol, which would result in a 37-per-cent drop in the guaranteed price for sugar supplied under the African Caribbean and Pacific (ACP)-EU Sugar protocol, which has given developing country farmers preferred access to Europe's markets since 1975.

The executive director of the Sugar Association of the Caribbean (SAC), Ian McDonald told reporters Wednesday the changes would result in losses of at least 90 million dollars a year to the region.

”This will devastate the sector,” he predicted.

”The proposal flies in the face of the EU's utterances that international trading arrangements should reflect the needs of development, and provide special and differential treatment for small and vulnerable economies,” added McDonald.

The Caribbean's major sugar producers are Jamaica, Trinidad and Tobago, St Kitts Nevis, Guyana, Barbados and Belize. Their peak production, in 1965, reached 1.35 million tonnes, but that figure has fallen annually to the point that the region now produces one-half that amount.

At their summit in Grenada last week, leaders of the region's governments characterised the EC proposals as ”a betrayal of the commitments and guarantees given by the European Union at the time of the negotiation of the (ACP) protocol in 1975.”

They said the price reduction, to be implemented in three stages starting in 2005, would result in ”an annual catastrophic loss of 90 million dollars by CARICOM sugar-supplying countries from 2008.”

”Heads of government noted that the projected loss outstrips by more than 150 per cent the aid that the EU has committed to regional programmes for the current five-year cycle,” they added in a later statement.

Barbados Prime Minister Owen Arthur told IPS that Europe's decision raises a ”large number of issues regarding the integrity of some provisions of the Cotonou Agreement itself.” The deal replaced the longstanding Lome Conventions under which Europe provided aid and technical assistance to its former colonies in the ACP regions.

Under the proposal, from 2005 to 2006 ACP sugar producers would be paid 506 euros per tonne, down 20 per cent from this year's 632 euros. For 2006/2007 there will be no adjustment, while for 2007/2008 there will be a further 16-per-cent price cut, which would see the price paid for sugar move from 506 euros per ton to 421 euros.

European producers would face the same price cuts, and have their quota reduced by 2.8 million tonnes to 14.6 million tonnes, over four years.

Europe is also promising to propose ”the introduction of specific measures to help sugar protocol countries adapt to the new market conditions.”

But governments here are not impressed. They emphasised that Caribbean sugar exporting nations, and other ACP states, are major stakeholders in the EU sugar regime, but were left out of ”any serious consideration” of the new proposal.

They labelled the new scheme ”an act of bad faith on the part of the European Commission.”

”Heads of government noted that while under the proposals EU sugar producers would be compensated for 60 percent of the price reduction, ACP producers would receive no such support. They emphasised that the assistance proposed for ACP producers through the European Development Fund was totally inadequate as this would only be a short-term measure,” they added in their statement.

In June, ACP leaders at their summit in Mozambique agreed to a proposal by Fiji to adopt a declaration denouncing the EU's position.

This week, the ACP states ended a meeting in Mauritius reiterating their concerns over the EU proposals, saying also they fear that a special and discriminatory compensation arrangement would be implemented for EU sugar beet growers for any loss they might sustain because of the price cuts.

The ACP states called on Europe to ensure that they are treated ”similarly to the outermost region of the EU,” and underscored the need for the sugar reform ”to be in conformity with article 36 (4) of the Cotonou Agreement, so as to safeguard the benefits derived from the sugar protocol.”

Guyanese Foreign Trade Minister Clement Rohee warned that Europe's decision could be ”very devastating for us.”

”The European Union cannot be insensitive to the sugar industry, which we do not see as an industry but as a way of life in our respective countries,” he told IPS, adding that the matter of compensation should be addressed holistically.

”We don't want, in terms of compensation, any one-off payment. This compensation should be directed at research and development of the sugar industry in our respective countries, which we in fact have already initiated in terms of reforms.”

But Arthur said there might be a silver lining to the European proposal. Sugar cane could provide various alternative economic opportunities for the region, he suggested, including in the fuel energy sector.

”Perhaps what this allows us is to conceive of a new programme of cooperation with Europe that has as its core not just the sale of sugar to Europe, but also cooperation in the form of new flows of resources to allow us to mount the programmes to begin to identify the alternative uses to which the sugarcane can be put,” Arthur said. (END)