Sugar in crisis
Editorial
Stabroek News
July 28, 2004
The crisis which threatens the survival of the sugar industry in Caricom States including Guyana had long been foreseen. The Caricom States had therefore in the recurring trade negotiations with the European Union (EU) sought and secured legally binding agreements and other assurances which would preserve their preferential market in Europe. Briefly, the crisis which threatens is the unilateral decision of the EU to reform its sugar regime of which the price arrangements for ACP and Caricom sugar are a part. The proposed consequential price reductions in three stages by 2007 amount to 37% and would represent a reduction in revenue of US$90 million annually to Caricom sugar producers including Guyana. The Sugar Association of the Caribbean has described the situation as "nothing less than a betrayal of reassurances given that any changes would be designed to avoid severe disruption to our economies."
The speed with which the proposals are being bulldozed through is surprising as the European Commission in an internal memorandum addressed to the European Council (Heads of Government) and the European Parliament recognises that "The challenges posed by the international commitments of the EU Sugar regime raise complex questions because any reform of the EU sugar (regime) is bound to generate both winners and losers within the developing world. Such questions should not be addressed simplistically or hastily as they require an open and structured dialogue with EU partners, with all relevant parameters discussed."
The ACP group of states which includes Caricom are longstanding partners of the EU with such partnership institutionalised in solemn treaties, the Sugar Protocol, and the successive Lome and Cotonou treaties. Yet it was not consulted.
In the EU, the proposals have had a very mixed reception varying from conditional grudging acceptance to hostility. Only the UK (which it is claimed has a special relationship with Caricom as at the recent UK/Caricom Forum) and Sweden have unreservedly accepted the obnoxious proposals. The Netherlands felt that the proposals would destroy the sugar industry as do Spain and Ireland. Likewise, most of the ten new EU member states foresaw that the proposals raised grave difficulties for them. This would certainly lead to a delay in implementation. However, Guyana and other Caricom states must not let such delay lull them into relaxing their efforts but should utilise the breathing time and space to mount a comprehensive campaign in support of their carefully defined objectives.
In this respect, the position of Caricom Heads of Government on this major threat to Caricom economies at least as recorded in its communiqué issued at its Summit three weeks ago in Grenada goes further than denunciation. Heads of Government rejected outright the proposals for the reform of the EU sugar regime, considered the proposals an act of bad faith and called on the European Commission to withdraw them and to ensure that the interests of the ACP sugar supplying countries are taken fully into account.
However President Jagdeo in his press conference revealed that it had been decided that the new Chairman of Caricom, Dr Keith Mitchell, Prime Minister of Grenada, will write to the President of the European Council (the equivalent of the Caricom Heads of Government Conference) the European Commission and the European Parliament. Individual Caricom Heads will be taking similar action. Given the realities of contemporary international politics letter writing may achieve little. You have to visit and talk. Even President Bush does that. A group of Caricom Heads must in keeping with the gravity of the issue visit with the European Council at its next meeting. In the case of Haiti, Caricom sent a delegation of five Foreign Ministers. Why is similar action not contemplated on the sugar issue?
President Jagdeo also disclosed at his press conference that Caricom had agreed to increase diplomatic representation overseas on the sugar issue. Indeed this is the kind of issue on which "insider" persuasion may be more effective than external pressure from groups such as the G-90. However, effective diplomacy will require clarity in objectives. Thus it should be recognised that there is no way in which one can halt the reform process. It is projected as part of a wider process, the reform of the Common Agricultural Policy (CAP) covering a wide range of agricultural products. It must also be recognised that ACP sugar producers including Caricom sugar producers are on this issue "the odd man out." The major developing country sugar producers including Brazil and Thailand and many other developing country producers want the reform. They demand the abolition of subsidies for beet sugar farmers and the ending of the export of their surplus sugar at artificially cheap prices to developing countries including Africa, thus denying those markets to the sugar from the developing country producers. Without such reform, developing country producers including Brazil and Thailand are the losers. Hence their current action before the WTO tribunal. With the proposed reforms they are the winners but the ACP producers who now have preferential arrangements become the losers.
Hence, there is need to explore whether the preferential price and quota access can be disengaged from the reforms and maintained separately and for what period. Similarly, there is need when rejecting the proposed compensation through the European Development Fund to have a precise compensation scheme which would be satisfactory.
The ideas outlined below, as in the foregoing paragraph, are meant to be suggestive rather than definitive, as any proposal must be in a very complex area on which there is little information. The diplomatic campaign might be directed to begin with to:
(i) The European Parliament where there have always been "radical" elements particularly sympathetic to the problems of the developing countries.
(ii) The House of Commons' Development Select Committee which is known to have real impact on UK thinking on development problems.
(iii)Non-Governmental Organisations (NGOs) which increasingly exercise powerful influence on their host governments. The Jubilee 2000 group for example directly influenced the creation of the Highly Indebted Poor Country (HIPC) scheme from which Guyana has had major benefits. The NGOs here identified are all in the UK - a good place to start because as already noted, the UK is one of only two states supporting the reform proposals.
There might be diplomatic contact with such groups as Jubilee Research, New Economic Foundation (a successor body to Jubilee 2000), Oxfam with offices in Brussels and Geneva, the World Development Movement which has twice taken successful action against the UK government and CAFOD, the Catholic Aid Agency which has already taken up sugar issues. All these NGOs have linkages with Euro groups. Such Track Two diplomacy is now a recognised part of the armoury of many states.
Guyana has already taken major action to ensure the future viability of the industry - including the new sugar factory at Skeldon which will improve quality and reduce production costs. New markets are also being developed including the Caricom Market which will soon consume almost l/3 of current production and in addition will be a major market for the refined sugar which Skeldon will produce.
Guyana, as Caricom's major sugar producer cannot stand aside but must play a major role in the campaign. To this end, the most urgent attention must be given to weak links in its diplomatic network. At the Brussels Mission, the crucial link, it is reported that the Ambassador's contract has just ended and it is understood is being renewed for a short period. And both of its two bright young diplomats have resigned for personal reasons. The New York Mission after three years is still without an Ambassador. The UN whose Foreign Ministers visit especially during the General Assembly provides an important venue for bilateral contacts. Where better to begin the exploration with the new EU members who find the sugar proposals unacceptable as to whether their concerns might be parlayed into joint positions. A new Permanent Representative (Ambassador) should be appointed as soon as possible. In addition, it is a grave gap in Guyana's diplomatic network that there is no Mission in Geneva, the location of the WTO where so much is happening which impacts directly on Guyana's trading arrangements. Ministerial visits can never be a substitute for a Mission which is in daily touch with events, personalities and new ideas and intrigues. The WTO holds an average of about 50 meetings each day, only a Mission can sort out what is relevant in this welter of discussions and negotiations.
Returning to the wider question it may not be too soon to examine whether the breaches in the Treaties involved are justiciable before the European Court of Justice.
At the press conference already referred to President Jagdeo made a number of refreshingly forthright statements. He said that some countries that traditionally had some obligations to the region because they took resources through slavery and indentureship "do not have any regard any more for historical obligations." He said they pay a lot of lip service to cutting poverty but when investigated "the policies they pursue run contrary to their objectives." The President's assessment is to the point but the situation to which he refers is a part of a wider trend, namely the general hardening of the attitudes of the North towards the predicaments of the South.
It is within this difficult scenario that Guyana and Caricom and the ACP must negotiate effectively to preserve and salvage their sugar market in the EU.