European proposal threatens sugar, rice - Rohee protests Guyana Chronicle October 22, 2000 GUYANA is strongly objecting to a European Union proposal which it says could deal a knockout blow to the vital sugar, rice and bauxite industries. "The combined impact on sugar, rice and rum all at the same time, in a market as important to us as the European Union's, is a virtual knockout blow", he told a meeting in St Kitts and Nevis. "Guyana cannot sustain this," Rohee stressed, saying the EU plan to remove preferences for products from the African, Caribbean and Pacific (ACP) group of countries "strikes at the root of the three pillars of (the) country's well-known weak economy." Sugar and rice have long been main planks of the Guyana economy and this country, like other ACP members have had special access at agreed prices to the European market for the products. The ACP, of which Guyana is a member, is linked to the EU by the Cotonou special trade and aid convention which has replaced the long-running Lome pact. Rohee charged that the EU `Everything But Arms' proposal breaches the procedures agreed in the Cotonou Agreement. "Guyana thought that in signing the Cotonou Partnership Agreement, it had safeguarded itself against such shocks. It now appears from (this) latest...action, which is certainly in breach of the procedures solemnly agreed to in that agreement, that we were wrong," he said. Rohee raised his concerns at a joint meeting Friday of the European Commission and Cariforum, the Caribbean countries in the ACP. "...this measure risks putting us back into the category of the poorest and least developed. That is certainly not what we were hoping for when we became a signatory to the Cotonou Agreement. "We, therefore, call on the European Union not to destroy the already poor to save the poorest," the Foreign Minister appealed. He said the European initiative "seems set to further jeopardise the region's economies, particularly in the vital bananas, rice, rum and sugar industries." He bluntly told the EU that the proposal "poses serious challenges for CARIFORUM countries". Many LDC's (Least Developed Countries) can increase their rice and sugar exports to Europe in response to full market access conditions, he noted. But the Guyana Foreign Minister pointed to the pitfalls of the European initiative. "In the case of rice, Guyana would face a difficult situation vis-a-vis the non-ACP LDC's. While the LDC's will be granted accelerated market access into Europe, Guyana is restricted to limited quota arrangements," he complained. He accused the European Commission of rejecting Guyana's efforts to negotiate better access conditions in the Cotonou arrangements. In Guyana, sugar and rice account for 23 per cent of the Gross Domestic Product (GDP) and 70 per cent of agricultural GDP, with 57 per cent going to sugar and 13 per cent for rice, the minister pointed out. Together they contribute 41 per cent of total export earnings and support 30 per cent of the population. Rohee said trading arrangements secured under the Sugar Protocol have provided stable and long-term support to ACP signatories. "It is the security of these arrangements that underpin the sustainability of the most important industry in my country. It is true also that sugar revenues sustain our developmental and poverty alleviation programmes," he explained to the meeting. Sugar is the largest earner of retained foreign exchange in Guyana and accounts for more than 26 per cent of its export earnings. It is also Guyana's single largest employer, providing direct employment for about 25,000 people, including women and small farmers, and indirect employment in ancillary industries for a further 10,000. "Any disruption of the Sugar Protocol regime would undermine our economic performance and our structural adjustment plans for the economy as a whole and for the sugar industry in particular. "Thus, in the context of the Sugar Protocol, any additional access for LDC's should not be such as to discriminate against the non-LDC signatories of the Protocol who have traditionally supplied sugar to the EU," Rohee argued. Caribbean ACP rum distillers get no subsidies while some 87 per cent of global production of alcohol is subsidised, he stated, adding that most ACP governments are under "great pressure to progressively liberalise their economies and therefore have no capacity to fund support programmes for domestic industries." The export market is critical to the survival of the rum industry which is one of the sectors that underpins economies in ACP Caribbean member states, Rohee said. The only ACP rice exporting countries are Guyana and Suriname where it is predominantly an export industry. This means, Rohee said, that the rice industry is "highly susceptible" to external shocks, particularly fluctuation in the world market price. He noted that the international competitiveness of the industry is essential to its survival and the small domestic markets here and in Suriname cannot sustain it. The bulk of the rice market for the two countries is in the Caribbean Community (CARICOM) and the EU and the industry needs a preparatory period of eight years to increase productivity and competitiveness, Rohee explained. The implication of the EU initiative, however, is that within four years ACP rice exporters may have to compete on a significantly less favourable basis in the EU market with the vastly larger non-ACP LDC producers such as Bangladesh, Cambodia, Laos, Myanmar and Nepal, he added. Follow the goings-on in Guyana in Guyana Today