David vs Goliath: C’bean battling EU over sugar

Sugar producing countries in the Caribbean and in the wider African and Pacific states face possible devastation of their sugar industries and major social and economic consequences if the European Union sticks rigidly and stridently to its plans to savagely overhaul its sugar regime. Guyana’s Minister of Foreign Trade and International Cooperation, Clement Rohee, the Caribbean Community (Caricom) spokesman on the sugar issue said ACP sugar producing countries have no choice but to take the sugar battle against Europe down to the wire. “It’s going to be very difficult for us at this time but we simply cannot  throw up our hands and say all is lost. We have to keep the fight going and  we also have to ensure that we utilise every available opportunity and make our position known,” Rohee told Business Day in an interview last week.

Out of total sugar production of 710,000 tonnes produced in the Caribbean, some 420,000 tonnes are currently exported to the EU under the Sugar Protocol.The EU proposals envisage a slash in the preferential price in two phases  over three years, beginning in July 2005. Caricom estimates that if allowed to go forward unopposed, the community  would entail a loss of income of about US$180 million in the first three years, with a recurring loss of US$ 90 million annually thereafter.

Revenue losses
Guyana estimates that the price cut next year will reduce its revenues from sugar by US$20M and a further price cut in 2007 will  reduce revenues by US$37 million. Under the ACP/EU Sugar Protocol, ACP sugar suppliers enjoy preferential terms for their exports to the EU. These prices are related to the price paid to Europe’s beet sugar producers  and a reduction of the domestic price paid in Europe ultimately reduces the price paid to ACP sugar suppliers. The ACP/EU Sugar Protocol was formed and took effect in February 1975. It is a government-to-government agreement between the EU and ACP states and covers individual quantities of cane sugar for each ACP country party to the agreement. EU proposals rejected. At a stakeholders meeting last month on the threat to the sugar industry, a common CARICOM position and an action plan was adopted. Among the key decisions was to reject the EU’s proposals and through meetings with Europe to insist on the special legal status of the Sugar  Protocol and to safeguard its benefits.

Dr Ian McDonald, Chief Executive Officer of the Sugar Association of the  Caribbean, at an ACP workshop on sugar in Brussels last month said the EU’s proposals pose on imminent threat to the basic livelihood of millions of ordinary people. The Sugar Protocol comes as near as possible to being the perfect trading instrument, he said, noting that it has “operated efficiently, transparently.” It has embodied ahead of its time the great and just principle of special and differential treatment for small, developing countries and  has immensely assisted in poverty reduction, he said. “In a world gone nearly mad in its infatuation for unfair, globalised free trade, the Sugar Protocol has been, and is, an oasis of sanity and sensible, stable trading,” Dr McDonald said in eloquent but dead-serious language.

He noted that the long term and stabilising pillars of the Sugar Protocol  guaranteed access, stable and remunerative prices, unlimited duration,  have underpinned the life-giving sugar industries for generations and have been the basis of measureless benefits to the economies and societies of developing countries in the ACP. “The wealth sugar has created in all the countries where it exists, the jobs it generates, the foreign exchange it earns, the infrastructure it has built up, the world-class research it fosters, the skills it teaches and shares and the long-term role it has played in preserving the environment  all give  the industry a significance that goes far beyond simple profit and loss calculations,” he said.

Foreign exchange earner

“Foreign exchange earnings from sugar amount to US$300 million annually and this does not include the earnings of the important rum industry which is a sugar offshoot,” said Trinidad-born Dr McDonald, who has made Guyana his home for more than half a century. “This represents a massive contribution in the relatively small Caricom economy.” He estimates that the sugar industry in Caricom generates 125,000 jobs in direct and indirect employment. Given that an average of four persons depend on one employed person, Dr McDonald concludes that no less than 625,000 persons depend on the sugar industry in Caricom out of a population of five million in the countries involved. “The benefits that flow from the Sugar Protocol directly into our  Caribbean sugar industries are not at all the preserve of the few and the wealthy but are widely and deeply spread among the hundreds of thousands of workers and farmers and their families and throughout hundreds and hundreds of small communities. Should the flow be disrupted the effect in human terms and at the grass roots would be harsh in the extreme.”

Secretary-General of Caricom, Edwin Carrington said he did not think that the EU had properly analysed and fully understood the impact the changes would have on Caribbean economies. “These changes do not live up to the spirit of the Cotonou Agreement, and to the assurances given therein.They are contrary to our joint commitment to foster development, reduce poverty and grant special treatment to the disadvantaged. Those of us who were present when the solemn undertakings were given at the signing of the Sugar Protocol, would find it hard to rely on future commitments.” Carrington, a former secretary-general of the ACP, said the proposed changes would undermine the Caribbean’s confidence at the  start of negotiations with the EU for an Economic Partnership Agreement.

EU dumping sugar
Caribbean sugar faces more headaches as the World Trade Organisation (WTO) ruled that the EU bloc is illegally dumping millions of tonnes of subsidised sugar on world markets. Brazil, the world’s largest sugar producer, and co-complainants Australia and Thailand won their case on virtually every count that the EU illegally subsidises exports of sugar above the levels agreed in the Uruguay Round Agreement. “We are dissatisfied with this ruling and will appeal it. But the EU’s  appeal will not prevent the EU from ploughing on with a radical overhaul of its sugar regime,” said EU farm Commissioner Franz Fischler.