First bananas, now sugar

The decision by the World Trade Organisation (WTO) to instruct the European Union (EU) to abolish the subsidies the EU now provides to the sugar it imports from ACP countries under the  Lome Convention will sharply reduce employment opportunities in Caribbean sugar producing countries, and most likely have a ripple effect in the EU itself. Particularly hard hit will be Guyana, which has enjoyed an annual preferential entry quota to the EU of more than 170,000 metric tonnes of raw sugar - “white sugar equivalent” - under a guaranteed price, and Jamaica, whose entry quota of raw sugar has been approximately 129,000 metric tonnes a year. Trinidad and Tobago will not be as hard hit as Government closed down State- owned Caroni (1975) Limited last year, and scaled down the country’s sugar production from some 80,000 metric tonnes to 60,000.

The move by the US-dominated WTO was not entirely unexpected since the US had already challenged the EU banana regulations. In the late 1990s, prodded by American companies operating in Central America - United Fruit, Dole and Chiquita - the US demanded an end to preferential entry. A compromise was reached in April of 2001, under which the EU agreed both to end its banana regime in 2006, and to slash its overall ACP preferential entry quota by 100,000 tonnes. But there is a fundamental difference between the US compromise on its original WTO position on bananas and the WTO’s on EU subsidies on sugar. One is that the preferential entry of Caribbean bananas to the EU will remain in place until 2006, while EU subsidies on sugar will have to be halted immmediately. What is ironic is that the US, despite its stand on preferential entry of ACP sugar to the European Union, has been granting Caribbean raw sugar an annual preferential entry quota of approximately 60,000 metric tonnes for the past several years.

While the revenues of most Caribbean Governments will be rolled back by the abolishion of EU subsidies on sugar and the 2006 end of the EU’s banana regime, the consequent loss of jobs will be a bitter pill to swallow. Caribbean countries, with their somewhat reduced GDPs, might have to face reduced imports of  many goods and services,  and this will mean that European exports to their traditional Caribbean markets, a feature since the islands were UK and European colonies, will be reduced appreciably. This will result in a consequent loss of jobs in the EU. This will not mean an increase of jobs in the US,  as the jobs created by the American owned banana companies are not in the US, but in Central America. What it will mean is a rise in dividends for shareholders of these companies at the expense of Caribbean jobs and Caribbean families.