The sugar issue is coming to the boil
The View from Europe
by David Jessop (Executive Director of the Caribbean Council for Europe)
Stabroek News
March 14, 2004
Some years ago a friend who subsequently became a government minister, would at any mention of sugar tell me that the future of Caribbean agriculture was likely to be little more than "gardening."
Since then, his iconoclastic remarks have been proved correct in those nations where the service sector has been encouraged to grow and has come to dominate the economy.
So much so that the best arguments left for retaining the sugar industry in some nations, now relate to the environmentally beneficial manner in which cane holds down the soil or is able to help fulfil some of the tropical expectations of visitors.
Despite this there remain a number of Caribbean nations in which sugar, rice and bananas will continue to provide employment for significant numbers living in rural areas. While these industries will undergo a transformation and contribute less, they are likely to remain central to preserving social, economic and political stability and by extension to the ability of the region to develop and sustain itself as a centre for tourism and financial or other services.
This may not be a comfortable message for Europe or others who believe that primary agriculture in the Caribbean can be abandoned somewhere along the road to full trade liberalisation. Nor is it one that the Caribbean has been very good at putting across.
A week or so ago, Caribbean security ministers met in Jamaica with a high-level delegation of security and defence officials led by Bill Rammell the British Foreign and Commonwealth Office Minister.
These discussions focused on practical measures that will create closer co-operation and co-ordination to ensure the greater security of the region. However, it appears that at this meeting those present on the Caribbean side omitted to join up the lines between enhanced security and its unavoidable pre-requisite, economic stability.
That this did not happen is worrying and indicative perhaps of the extent to which ministers sometimes follow their portfolios in isolation from the bigger picture.
In many capitals outside the region those in government who are friends, note that they need holistic messages put forcefully by all Caribbean ministers on every possible occasion if they are to convince their colleagues or others in Europe or North America of the need to find viable trade solutions.
On March 3 in London, Margaret Beckett the British Secretary of State for Agriculture addressing a conference organised by Agra-Europe made clear the imminent nature of the challenge that now faces sugar in the Caribbean and elsewhere in the ACP group of states.
She noted that the EU's sugar regime has remained largely unchanged since its inception.
However, it was, she told participants, now under internal pressure as Brussels spends around US$2 billion a year on a system that "inflates prices for consumers and industrial manufacturers."
The external pressures, she noted, were just as great. She pointed to the fact that by 2009, the EU's Everything But Arms agreement will allow the world's least developed countries to export sugar to Europe quota and tariff-free. She also warned those present not to underestimate the implications of the challenge mounted by Brazil, Thailand and Australia at the World Trade Organisation to the EU sugar regime.
In her remarks, Mrs Beckett dismissed the first of the three options that the European Commission has put forward for a new sugar regime, namely status quo (the others are a reduction in price support, or full liberalisation of the market).
She also ruled out any variant on status quo. This, she said, suggested an extension of the current regime.
In an indication of what Britain is thinking about a fourth option involving quotas that is being promoted by sugar producers in the ACP group, the British minister noted: "Defenders of the regime have advocated a variant on [status quo] which would give us fixed quotas and preferential access for the least developed countries, enabling them to benefit from the high prices of the EU market as do many African, Caribbean and Pacific countries at present. But that does nothing to address the other faults.
Others in the WTO might view it as a cynical ploy by the EU to maintain a highly distorting regime.
I question, too, whether it is really in the long-term interest of the least developed countries for significant parts of their economies to remain so dependent on a single foreign subsidy regime. Real economic security depends on diversity and integration into world markets, rather than prolonging a culture of dependency and protectionism."
Despite this, Mrs Beckett said that she was "not at all dismissing the genuine concerns either of the sugar industry in the EU or those of the developing countries that enjoy preferential access at present...
"Whatever reform is agreed the industry needs time to prepare and adapt and the impact on those developing countries needs to be addressed," she noted.
Her remarks echoed those of the EC's Agriculture Commissioner Franz Fischler who recently was reported as saying that the EC had to face its international obligations while needing to compensate both EC producers and ACP countries for losses due to price and quota reductions.
Sugar as an issue is coming to the boil. Although there are internal disagreements within the European Commission as to when an outline of a new regime should be introduced, there are some signs that both the Trade Commissioner Pascal Lamy and the Agriculture Commissioner, Franz Fischler may start, for political reasons, to develop specific proposals by mid-year. These it seems would be under a full liberalisation option that could see European sugar production decrease by as much as 75 per cent.
There is a real danger that changes to the way in which the European sugar market is re-organised could well destabilise Guyana and Jamaica and possibly other Caricom states. The Caribbean needs to explain that physical security, the long-term success of tourism and services and viable sugar, rice and banana industries are interdependent parts of a future regional whole. This is the moment when the implication of a collapse in sugar or bananas on all other Caribbean sectors needs to be made clear.