Guyana protests Brazil's challenge to EU Sugar Regime
Stabroek News
November 7, 2002
Foreign Trade Minister, Clement Rohee has written his Brazilian counterpart, Sergio Amaral protesting Brazil's and Australia's challenge to the European Union's Sugar Regime of which Guyana is a major beneficiary.
He also noted in the letter that India, Guyana and nine other ACP (African, Caribbean and Pacific group of countries) signatories to the Sugar Protocol have registered their interest as third parties to participate in World Trade Organisation (WTO) consultations on the challenge.
Australia and Brazil have requested WTO consultations on the EU's sugar subsidies, which they claim are depressing world prices and reducing the earnings of all producers.
In the letter, Rohee observed that Guyana has been always been assured by the Brazilian Foreign Ministry that "it is not Brazil's intention to harm the interest of the ACP."
But he notes that any impact arising from the challenge to the Intervention Price, one of the elements of the EU Sugar Regime, at the WTO could seriously affect developing countries including Guyana.
ACP countries receive a price about three times the world price for their sugar exports to Europe. This is seen as vital for the survival of their industries with the world price of sugar at record lows.
For Guyana in particular, Rohee says the Intervention Price is critical for the success of the restructuring of its sugar industry now in progress to make it competitive, productive and efficient in the future given that substantial erosion of trade preferences is now high on the agenda of global trade. Any undermining of this process, he points out "will be fatal for the industry".
"As you can appreciate, undermining Guyana's sugar industry will remove the Industry's 20% target contribution to our GDP (Gross Domestic Product), direct employment to over 24,000 (approximately) people, and removal of direct and indirect benefits to more than 18,000 (approximately) people dependent on the industry. Furthermore, the Industry's multi-functional role in areas of social development and poverty alleviation will be severely dislocated."
He observed that challenges such as that initiated by Brazil and Australia are "tantamount to an attack on one of the main pillars of Guyana's economy, not to mention the negative impact it will have on the much vaunted claim by the large players at the WTO about integrating the smaller economies in a positive way in global trade so that we can reap the requisite benefits".
Rohee points out that the ACP countries "cannot see the merit and the justification of this stance because your very action in seeking consultations under the various WTO provisions is likely to undermine our interests".
He points out too that the various elements of the EU Sugar Regime (the "C" sugar, the Intervention Price, the 12.6 million tonnes of sugar allowed for exportation) are interlinked. "Undermine one and the implications will spread to the other elements. Once that has happened, the coherency of the Sugar Regime will be lost and the very foundation of the fundamentals of the Sugar Protocol, under which Guyana sells its sugar to the EU, will disappear".
He stresses that the relevance of the ACP group's views can be appreciated since if consultations did not resolve the concerns raised, then the matter will escalate to the panel stage. "Should the panel rule in your favour, I cannot imagine the disaster it will spell for the ACP sugar producing countries including Guyana".
Commenting on the concerns that the "C" sugar is exported at prices below its total cost of production, Rohee points out: "It is important to bear in mind that any discounting of that class of sugar from the Regime will have far reaching implications on the structure and coherency of the Regime itself. Such an act by its very nature can lead to further undermining of the merit of other elements of the Regime."
Rohee also sought to clarify the concern that the EU provides export subsidies in excess of its export subsidy commitments specified in Section II and IV of its schedule of concessions:
"For your information, the 1.6 million tonnes of sugar happens to be the equivalent of sugar that the EU imports from the ACP sugar producing countries under the Sugar Protocol.
Therefore if questions are raised about this quantity, then the quota under the Sugar Protocol becomes threatened and Guyana can say good-bye to its main sugar market."
About the Intervention Price, he points out "the Intervention Price Raw, which is derived from the Intervention Price White, is the same price paid to ACP sugar producers under the Sugar Protocol".
He points out too that a variant of this price is also paid under the Special Preferential Sugar (SPS) arrangement, which has been extended to sugar imported under the EU-sponsored Everything But Arms (EBA) arrangement for less developed countries. He added too "a further variant of that price is also paid to Brazil and Cuba under a special tariff line to benefit the Finnish refineries".
