125,000 to be affected by EU sugar reform
Minister Rohee
Kaieteur News
July 24, 2004
Minister Clement Rohee said under the proposed European Union (EU) sugar regime reform, the social impact in Guyana would negatively affect 20,000 sugar workers, 100,000 workers associated indirectly with the industry as well as 5,000 private cane farmers.
“The proposals by the EU to reform its sugar regime if implemented will be unilateral, discriminatory and contrary to the letter and spirit of our privileged ACP-EU Partnership Agreement and the provision of Article 36 (4) of Cotonou,” Rohee stated.
Reporting to Parliament yesterday on recent developments with respect to the trade in sugar between Guyana and the EU, the Minister of Foreign Trade and International Cooperation said Guyana would stand to lose US$37 million annually out of the 167,000 tonnes of sugar exported to Europe.
The minister stated that now the European Commission has adopted the reform proposals, actions adopted by Ministers and Heads of Government of the ACP and CARICOM recently will be initiated.
“These actions suggest a wide array of political and diplomatic interventions at the bilateral and multilateral levels,” he said.
Rohee noted that European beet producers will be compensated 60% of the loss in revenue resulting from the sugar price reduction.
However the EU is not proposing direct compensation for Association of Caribbean and Pacific (ACP) countries, including Guyana, but adjustment and restructuring assistance instead.
The proposal for adjustment and restructuring assistance is short term.
Rohee pointed out that this follows the same treatment meted out to the defunct banana protocol which has been decried because it has not worked and nothing disbursed so far.
He said concern has been expressed in some quarters that if the ACP countries discussed the issue of compensation publicly, it could be seen as tacitly conceding to the proposed price cuts.
As a result, it was the emerging consensus that the ACP countries would discuss the principle of compensation instead and not the modalities.
The Minister said: “There is no room for complacency and it will certainly not be business as usual as regards our relationship with the EU so long as this sword of Damocles hangs over our sugar industry and the livelihoods of our people. At the same time, we have to look to the future with confidence and optimism.”
Giving some background to the EU sugar proposal, Rohee said the European Commission had issued an internal communication to the European Council and European Parliament on its sugar sector reform on July 14.
The document stipulated that the new regime must be subjected to the same reform requirements of the Common Agricultural Policy.
It stated that the regime must be market oriented and internationally competitive while allowing for the production of ethanol and isoglucose and at the same time result in the reduction in price, facilitate quota mergers and quota transferability, as well as the abolition of the intervention agency and intervention price.
The document also said the reform of the regime also envisages abolition of refining aid and the production levy, incorporation into the single farm payment system and retention of the sugar protocol but with the guaranteed price equated with a new reference price.
Rohee said the document proposes the reduction in price in two stages: 20% for the first two years 2005-2007 and a cumulative reduction of 33% in the third year, 2008.
He explained that this means that white sugar price will be reduced from 637 Euros per tonne to 421 per tonne while the ACP states’ raw sugar price will be reduced from 523 Euros per tonne to 329 Euros per tonne, a reduction of 37%.
Also, the refining aid of 29Euros per tonne currently being paid directly to the refiners from the EU budget will be deducted to arrive at the price of 329 Euros for the ACP sugar protocol price.
Rohee emphasised that the EU’s internal decision-making procedures will not allow the adoption of the relevant regulation on the matter before July 2005.
He noted that long before the disclosure of the proposed reform package, CARICOM Ministers engaged in discussions and strategy sessions aimed at formulating responses to treat with the impending reform of the EU sugar regime.
In addition, lobbying missions were undertaken by Ministers to a number of European capitals to sensitise their European counterparts about their views on the matter.
Rohee reported that the EU’s Inter-Services Group had issued the discussion paper on the reform of its sugar regime.
The three options mentioned in the paper were an extension of the present regime, a reduction of the EU’s internal price, and a complete liberalisation of the regime.
Rohee said the EC’s preference was for a reduction of its internal price.
In response, ACP sugar supplying countries decided on a multi-faceted counter strategy in an attempt to ensure that their economies would not be adversely affected in any reform package.
The Minister said the ACP countries established alliances with stakeholders to try to influence EU decision makers to adopt the reform option which the ACP countries had a preference for.
The ACP’s preference was the extension of the present regime and to develop new and appropriate arguments to counter the EU’s proposed option.
Rohee said the ACP countries also worked to maintain a close collaborative relationship with the European beet producers, sugar refiners, European non-governmental organisations, farmers’ organisations and Least Developed Countries with a view to developing common positions for their engagements with the EU.
He said the ACP’s position on the EU’s option paper has always been a return to fixed quotas and a guaranteed price with the aim of maintaining an orderly, stable and remunerative market.
He stated that the ACP countries deemed this vital to facilitate the restructuring programme of their sugar industries and enable them to attract essential investment finance.
The ACP countries also stated that any new reform regime should cover a relatively long timeframe and an y price decrease should be slow and gradual.