EU sugar price cut proposal 'unfair, illogical' - McDonald
Boast says Guysuco will mount lobby
Stabroek News
June 27, 2004
The proposal by EU Farm Commissioner, Franz Fischler to chop EU sugar prices has been rejected by Chief Executive Officer of the Sugar Association of the Caribbean Ian McDonald, as "unfair and illogical"; and Guysuco's top man, Michael Boast says it is bad news for Guyana.
Fischler's proposal will see sugar prices dropping by 20% next year and down by 33% in 2007.
"This proposal is unacceptable and should be rejected out of hand if the EU is serious about assisting developing countries and if the EU is to maintain its integrity by adhering to solemn commitments made in the Cotonou Agreement," McDonald said in a statement which has been endorsed by Boast.
The SAC has already registered its concerns to its member governments and McDonald expects that these governments will react quickly to reject the proposal. The SAC will make its services available to support the anticipated lobby against the proposal.
Boast says Guysuco will be lobbying against the proposal which could cost the firm US$200 per tonne of sugar, which on an export base of 167,000 tonnes would be the equivalent to US$33M a year.
"This will make life very difficult for Guysuco…we would have to reduce costs a lot (including jobs)," Boast said last evening.
Fischler's proposal, which seeks to radically overhaul the EU's sugar regime will have a detrimental effect on Guyana and other ACP producers, if approved. The proposal is yet to be cleared by the EU Commission. The commission is expected to make its views known by mid-next month and if it approves the proposal, the next step would be to seek approval from the EU Council and then parliament.
But because the life of the current commission is running out, it is anticipated that the council may choose to have the new commissioners' input into the proposal before it moves on to the EU parliament.
Boast says it is unlikely the proposal will go through and McDonald is also hoping for this.
However, McDonald underscores the need for governments and the Regional Negotiating Machinery (RNM) to act swiftly and says the special COTED meeting on Friday in Grenada should register a strong response to this proposal.
The SAC has informed the RNM of its objections to the proposal and McDonald says he has every confidence that the RNM will represent the position of the ACP "powerfully" on this issue as well.
"The proposal ignores points repeatedly made by the developing ACP sugar exporting countries and in particular ignores the sanctity of the benefits of the Sugar Protocol as set out in the Cotonou Agreement," McDonald asserted.
He says the proposal to slash sugar prices cuts right across "the reassuring guarantees" given by the EU Commissioners including Fischler himself and Pascal Lammy on the need to give ACP time to adjust.
McDonald notes that the proposal deals mainly with the effect of the price cut on the European beet industry and the means to compensate farmers in European member states.
"Reference to compensation for ACP suppliers is limited and repeats the completely unacceptable proposal that this be dealt with through the European Development Fund in a way similar to bananas. Commissioner Fischler's suggestion that the banana compensation scheme was sensible and successful is outrageous and entirely unacceptable for the sugar industry," McDonald stated.
He says the proposal deals with reform for reform sake and ignores the real needs of ACP developing countries; ignores the considered views of ACP countries submitted to the EU Commission; and ignores the solemn commitments of the EU in the Cotonou Agreement Article 36 (4) to review the Sugar Protocol with a view to safeguarding its benefits.
McDonald ridiculed the proposal as being based on false assumption and flawed thinking. He notes as one example the comment in the text introducing the proposal saying that the gap between EU and world market prices has grown larger and therefore something is wrong with the EU prices, rather than with the so-called world market price.
"As a global dump-market price, the so-called world price for sugar represents only about half average world cost of production and is well below the production costs of even very efficient world producers [including all those in Europe]." He argued that from such false analysis flows many evils.
McDonald also questioned how many times it has to be said that compensation cannot take the form of "mere one-off development assistance pittances but should be fair, transparent, equitable, quickly and easily disbursed and should be 100% of any loss of revenue and replace the value of any loss of preferences without conditionality and should be producer targeted along the lines of Europe's own CAP system.
"These proposals are blind to the terrible consequences of what was done to bananas in the Caribbean when `reform' proposals for the Caribbean industry were adopted by the EU," McDonald said, noting that Fischler actually suggests "without shame" specific programmes similar to those introduced for bananas to `help' ACP sugar producing countries.
He also said that the proposal flies in the face of the EU's utterances that international trading arrangements should reflect the needs of development and provide special and differential treatment for small and vulnerable economies.
He said the proposal would seriously affect plans and programmes, encouraged by the EU, in ACP states to restructure their sugar industries to make them more efficient.
McDonald said the proposal gives priority to the demand of the huge, rich, corporate industrial users of sugar for lower prices and ignore the need of developing countries for stable and remunerative income.