Damocles sword over Caribbean sugar
-- RNM warns
Guyana Chronicle
August 7, 2004
THE Regional Negotiating Machinery (RNM) says this week’s preliminary World Trade Organisation (WTO) ruling on European sugar subsidies threatens the sugar sector in Guyana and other Caribbean countries.
In a release yesterday, it noted that a WTO panel issued a preliminary report Wednesday in a case brought in 2003 against the European Community (EC) by the complainants, Brazil, Australia and Thailand regarding the EC’s sugar policies.
“The case has major implications for the six sugar–exporting CARICOM countries (Barbados, Belize, Guyana, Jamaica, St. Kitts and Nevis and Trinidad and Tobago), as well as for other sugar-exporting countries of the ACP (African, Caribbean and Pacific) group, all of which benefit from the Sugar Protocol with the EC, which links the price of ACP sugar to that of EC sugar”, the RNM said.
Brazil, Australia and Thailand together had requested the establishment of a panel to examine the legality of the subsidies applied to EC sugar. They claimed that the EC's direct and indirect subsidies on the export of its sugar were not consistent with the EC's WTO export subsidy obligations contracted during the Uruguay Round.
In its defence, the EC claimed that it was totally convinced of the WTO consistency of its sugar regime. Further, their exports had remained stable for many years and could therefore not be blamed for low prices on the world sugar market.
Several ACP countries joined in as third parties, emphasisng the importance of EC sugar preferences for ACP states, the RNM said.
The body said the although the report is still confidential, and therefore only formally available to the actual parties to the dispute, reports are that the interim findings validate the complainants’ argument that the $1.4 billion of subsidised EC sugar exports violates WTO trade rules.
Under the rules of the WTO Dispute Settlement Understanding, at the interim stage of the panel process, a preliminary report is issued to the parties, who are then allowed to review and request changes to the findings of the panel.
The panel then considers the request, and revises the conclusions if they deem it necessary, following which the report is finally circulated to all WTO members, the RNM pointed out.
The practice, however, is that the final report of the WTO panel rarely differs from the preliminary report., it noted.
At the same time this is not the end of the process as the EU could decide to appeal to the WTO Appellate Body once the panel report is circulated in September.
At that time it will indicate those aspects of its sugar policies the EC may have to reform and in what time frame, the RNM said.
The preliminary ruling comes at a time when the EC is contemplating plans to significantly reform and restructure its internal sugar regime, by inter alia, reducing the generous prices it pays to its beet sugar producers.
The current EC reform proposals have been firmly criticised by the Conference of Heads of Government of the Caribbean Community meeting in Grenada in early July, since price reductions envisaged would, if implemented, result in losses of tens of millions of dollars to the industry in the Caribbean and affect employment and living standards of hundreds of thousands of workers.
“Together the reform process and the preliminary ruling represent a Damocles sword over Caribbean sugar.
“The EC will therefore be very conscious of the need to balance all these considerations in deciding what action they should take following the WTO decision”, the RNM said.
It said that the Commission’s spokeswoman, Arancha Gonzales, announced that the EC must decide “whether or not we appeal this decision and whether or not we need to do anything in terms of changing what is already on the table [for reform] to accommodate the results of the panel.”
In any event, the EC is likely to want to stall any action at the WTO, pending the outcome of their internal reform consultations, and will more than likely buy more time through the appellate process.
“In the meantime, the Caribbean does not intend to allow the WTO decision to halt their own consultations with the EC regarding the effects of their internal restructuring on the rights guaranteed to the ACP under the Sugar Protocol”, the RNM said.
It noted that the panel report and proposals for reform of the sugar regime come at a time when most of the sugar-producing countries have developed plans to restructure in anticipation of a more competitive environment.
“These developments heighten the need for near-term support from the EU to facilitate industry restructuring and diversification as deemed necessary”, it stressed.
At their last July Meeting, CARICOM Heads reiterated their intention to continue consultations with relevant stakeholders in the Caribbean and to make strong representations to the European Commission on behalf of Caribbean sugar producers.