DEVELOPMENT:
Sugar Can Mean Life to Poor Countries

Stefania Bianchi

BRUSSELS, Apr 26 (IPS) - Sugar producers from some of the poorest countries who will see their livelihoods devastated by an overhaul of European Union's controversial sugar regime are demanding that the bloc considers an alternative which will have a ”greater, more positive, development impact.”

They say an alternative plan to reform the European Union (EU) sugar policy could create thousands of jobs in developing countries and attract an extra 385 million euros (500 million dollars) in investment.

Quoting from a report that it commissioned from the consultancy firm LMC International, the LDC Sugar Group, which brings together ambassadors of least developed countries (LDC) with an interest in sugar and sugar industry representatives, said Monday its alternative would create up to 145,000 permanent new jobs and many more indirectly.

”The LDC Sugar Group's proposal would limit the price reduction -- while continuing tariff quotas -- over the medium term and lengthen the time taken for the reform to take place, from three years to ten,” the group said in a statement.

The reform proposals by the European Commission, the EU executive, announced last July envisage cutting the guaranteed price of sugar imported by the EU from these countries by one-third between 2005 and 2007, and reducing sugar quotas.

As part of its development policy, which has been criticised for unfairly discriminating against sugar producers from other developing countries, the EU currently pays above market rates for sugar from a number of African, Caribbean and Pacific (ACP) countries, many of them former colonies of European countries.

The preferential access of ACP countries to the EU market currently represents some 70 percent of the revenue of their sugar sectors.

The loss of those privileges when the EU starts paying prices closer to market rates is expected to have a huge economic impact in many ACP countries that are dependent on sugar exports to the EU. The current regime is due to come to an end in 2006.

The EU was forced to change its policies after complaints from major sugar producing countries such as Brazil and Australia which argued that EU subsidies were unfair. The World Trade Organisation (WTO) upheld those complaints in part in October last year.

The Commission says it proposes to enhance the competitiveness of the sugar sector where this is sustainable, promote diversification in sugar-dependent areas, and address broader adaptation needs.

However, officials from the sugar-producing group of 27 LDCs say the proposed reforms would be disastrous for their countries and would put vulnerable economies and hundreds of thousands of jobs at risk.

The LDC group, which includes poor producers such as Burundi and Somalia, is calling for a 10-year delay in duty-free access and increased quotas.

”The additional period will allow these countries time to attract investment and develop sustainable sugar industries. The report found that managed access at remunerative prices generates far more development in the LDCs than unlimited access at uneconomic prices,” the group said.

The LDC Sugar Group's proposal also allows for a more modest price reduction -- a 20 percent price cut rather than 37 percent as proposed by the Commission.

”The LDCs perceive that a substantial price reduction in the EU sugar price -- an effect of the Commission's proposals -- would be a severe impediment to the development potential of the EBA initiative,” the group said. The Everything But Arms (EBA) initiative was adopted in September 2000 to liberalise EU imports of all products, except arms, from poor countries.

The LMC report also found that the proposals would help the LDCs create ”sustainable and competitive” sugar industries.

”This would have a positive impact on reducing poverty in these countries as well as increased health, education and social welfare for workers and their dependents, whereas such benefits would not accrue from the current EU proposals being considered,” the report found. Speaking at the launch of the report Monday, Ali Yousif, the Sudanese Ambassador in Brussels and chair of the Brussels Sugar Group, said that the report marked an opportunity for change.

”There is an opportunity here to make a real difference to the sugar industries of the world's least developed countries, creating thousands of jobs and bringing in millions of dollars in investment. Our fear is that by overlooking our alternative proposal and pressing ahead with the current reform plan the good intentions of the Everything But Arms initiative will not be realised,” he said.

Yousif also urged EU member states to consider alternatives to the Commission's proposals and to take stock of this report.

Maurice Janssen from LDC Sugar Group says he is confident that the report will have an impact. ”We feel that the findings are so positive that we don't believe that these can be ignored,” he told IPS Monday.

The group also rejects claims that its plan may be seen as too optimistic. ”Our LDC proposal is a formal and common position of 22 LDC countries; we communicated this to LMC -- a professional independent group of researchers. It is their findings, not ours that are published in the study,” he added.

The LDC proposals were presented to the Commission last month, but the executive has yet to respond formally to the plan.

The EU's current sugar reform plan is likely to see some changes over the next few months as the WTO will rule Thursday (Apr. 28) on the EU appeal against the WTO verdict in 2004 that branded many of the bloc's sugar exports as illegal. (END/2005)