The fight for a fair deal in sugar By Ian McDonald
Stabroek News
November 3, 2002

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Developing countries in CARICOM have consistently been betrayed and exploited by developed countries in our efforts to maintain the integrity and the vital contribution which agriculture makes to our economies, our societies and our way of life.

You know about bananas - victims of a brutal attack in the developed country manipulated WTO by American multinationals in South America.

You know about rice - victims of the European Union “closing a loophole” which used to give us advantageous access to its market.

You know about rum (derived from an important agricultural by-product, molasses) - victims of a deal stitched up between America and the EU behind our backs.

You probably don’t know as much about the important dairy farming industry in Jamaica but let me tell you about that now. In 1992 the Jamaican government was pressured, “in the interests of free trade,” to de-regulate its market in dairy products and stop subsidies to local producers. You can guess what happened.

Subsidised milk powders flooded in from abroad and since 1992 imports of dairy products into Jamaica have soared, squeezing local milk producers down to a 7.5% share of their own market.

It is happening all over. CARICOM agriculture is at risk. We meekly follow the free-trade dictates of others who have absolutely no intention of adhering to those dictates themselves when doing so would threaten their interests.

And now they are coming for sugar. The destruction of our sugar industry is next on their agenda. Well, they are going to have a real fight on their hands.

Nearly all the sugar produced in the world is preferentially traded. Why then should sugar preferentially traded by a group of small and vulnerable developing countries, including Guyana and other CARICOM countries, apparently be slated for elimination? Why do a lot of people, including some of our own, seem to go along with this? It doesn’t make sense, it would overturn long-established and solemn covenants, it is anti-development, it is anti-alleviation of poverty. It must be resisted.

Most of the sugar produced in the world is sold in preferential markets - that is, sold either in domestic markets which are protected or sold under special trading arrangements. The result is that the so-called “world market price” for sugar is not a market price at all since it applies only to a small, residual amount of traded sugar.

The “world price” for sugar is therefore not an indicator either of efficiency or average world production costs.

It is a common misconception that competitiveness in sugar can be measured by an industry’s ability to match so-called “world price” levels. Competitiveness in sugar cannot, stress cannot, be so measured. If you have ever thought it can, please forget that very damaging misconception from now on.

Guyana and CARICOM sugar has had a special trading arrangement, first with Britain under the Commonwealth Sugar Agreement since 1950 and then with Europe under the African, Caribbean and Pacific-European Union (ACP-EU) Sugar Protocol since 1975. This trading link is well established, has been beneficial to both parties and is currently secured in the Sugar Protocol which is part of the European Union’s own sugar regime and is a marketing agreement which has a special legal status acknowledged by both sides. The Sugar Protocol gives specific quotas (Guyana 170,000 tonnes, total CARICOM 430,000 tonnes) at a guaranteed price and is of unlimited duration.

CARICOM (including Guyana) also sells sugar to the European Union under the Special Preferential Sugar agreement which came into force on July 1st, 1995 for 6 years and which has been renewed for a further 5 years. This agreement gives lower quotas and these vary from year to year according to the needs of EU refiners. The price in this agreement is slightly lower than in the Sugar Protocol. In 2001/02, through the EU’s EBA initiative, Least Developed Countries were given access to 15% of the market, rising by a further 15% annually, at the expense of the previous holders of quotas under this agreement. This aspect of the EBA initiative is being protested. It is good that the Least Developed Countries should gain access but it is grossly unfair that this access is not additional access in Europe but instead is access taken away from sister developing countries.

Access to the EU market under the Sugar Protocol and Special Preferential Sugar agreement has been, and remains, crucial to the sugar industry in Guyana which in turn remains vital to the economic development and social stability of the country. Guyana needs economic diversification but diversification will come in addition to sugar, not instead of sugar. Diversification will be impeded and made more difficult if the economy is penalized by sugar’s decline which is exactly what happened in the 1980s.

The vital access provided by the Sugar Protocol agreement is currently threatened by moves in certain quarters in the EU and at the WTO connected with the relentless drive to impose unbridled free trade and the supremacy of unadulterated market forces. These hypocritical attempts to saddle the developing world with trading arrangements basically inimical to poor, weak, vulnerable and developing countries are being increasingly resisted.

Small, poor developing, vulnerable economies like Guyana’s simply cannot survive successfully in the threatened new environment. For the sake of development (the current WTO round of negotiations is declared to be a “development” round), for the sake of the alleviation of poverty (the EU says this lies at the heart of their trade policy) and for the sake of a non-disruptive entry into the mainstream of world trade (everybody says that this is their aim for small, poor vulnerable countries) - exceptional arrangements must be made - “special and differential” treatment must be given - for countries like Guyana. This is essential. We risk the danger of becoming a “failed state” and therefore a burden on the world community if this is not fully appreciated and acted upon.

In Guyana’s case the benefits of the access we enjoy for sugar through the Sugar Protocol must be extended indefinitely so that this most vital industry is given time, and can continue to depend on the “bankable assurance” provided by this access, to continue its excellently conceived programme of adjustment, expansion, improved productivity and increased competitiveness.

In the Cotonou agreement between the ACP and EU, Clause 36 (4) clearly calls for the benefits of the Sugar Protocol to be preserved. This must be given practical effect in the coming negotiations between the ACP and the EU.

The European Union’s EBA initiative, while good in principle, in the case of sugar is deeply unfair. A way must be found to right this wrong which is the cause of great loss in the sugar industries of Guyana and the Caribbean. The EU must act in the spirit of the EBA initiative and fix this obvious deficiency in it.

Our leaders, our diplomats, our negotiators, our private as well as public representatives, our media, must not make the terrible mistake of seeming to accept that sugar “preferences” are going to disappear soon, for instance by the end of this decade. These preferences certainly need not, they rightfully should not, they definitely will not disappear if we do not allow ourselves to be deceived and intimidated by opposing vested interests and the media they control, if we build on what we have already achieved, and if we stand up for our long and well established rights in coming negotiations described by everyone - rich and poor countries alike - as a “development” round with the declared purpose of “alleviating poverty.”