David Jessop, Contributor
ON JUNE 22, the European Commission (EC) will reveal the nature of its new sugar regime. Under the terms of the European Union/ African, Caribbean and Pacific (EU/ACP) sugar protocol that links ACP and EU sugar prices, the EC will also be announcing, by extension, the size of the cut in the price paid for sugar from Caribbean cane farmers.
In so doing, Europe will determine the fate of the Caribbean sugar industry without having had any serious dialogue with the region's governments or producers about the implications of what will be proposed.
It is an example of Europe at its worst: Careless about the implications for the stability, development or security of countries that it regards as its friends and partners.
No one should doubt that Europe's sugar regime requires reform or that the special preferential arrangements on sugar with ACP producers have to change. However, the manner in which the EC is introducing what is largely seen by its Agriculture Directorate as a domestic measure, contrasts greatly with Europe's honeyed words on development, trade and partnership and suggests at best a lack of coherence between the remarks and intentions of the commissioners responsible for development and trade and the commissioner in charge of agriculture.
In July 2004, the Agriculture Directorate formally outlined its thinking on a new sugar regime for Europe. At that time, in a communication (policy paper), it proposed that the prevailing EU intervention price of632 per tonne (roughly three times the world market price) should fall in three stages to423 per tonne by 2007/8. It suggested that at this point, the regime would be further reviewed in the light of the outcome of the Doha Development Round and the EC's appeal against the successful World Trade Organisation challenge brought by Brazil, Australia and Thailand over EU export subsidies for sugar.
Little more was said, but shortly after the WTO upheld its ruling against the EU in April 2005, the office of the EC Agriculture Commissioner, Mrs. Fischer Boel, let it be known through the media that she would propose in June a larger once-and-for-all price cut and modifications to the original proposal.
Although copies of the draft regulation setting out how this will work are not yet in the public domain, a near-to-final draft of the document makes clear that the EC will propose on June 22, a cut in the EU institutional price by 39 per cent over two years starting in 2006.
The proposal is that the reference price for white sugar be632 per tonne for 2006/7;475 per tonne for the marketing year 2007/8 and385 per tonne for 2008/9 (respectively for raw sugar497 per tonne for 2006/7;397 per tonne for the marketing year 2007/8 and303 per tonne for 2008/9).
The draft regulation provides for European beet farmers to receive grants of 60 per cent of their estimated revenue loss and further support for quota renunciation. It suggests also that Europe will provide its farmers with income support at the level ofl530 million per annum. Additional funding will be made available separately to support cane sugar producers in Europe's outermost regions, the French Départments doutre Mer, the Balearics and the Azores).
REFERENCE TO ACP SUPPLIERS
The draft EC proposal makes only one specific explanatory reference to ACP suppliers, noting that 'dialogue is currently taking place with ACP countries regarding the commission's working paper for an action plan on accompanying measures for sugar protocol countries affected by the reform of the EU sugar regime'.
This is stretching the truth. EC proposals for an action plan for restructuring, retraining and diversification were made public earlier this year but there has yet to be any sustained exchange between potential beneficiaries and those in Brussels designing the scheme.
Consultations with the ACP on the action plan have been sporadic at best. At no stage has the EC formally engaged in dialogue with ACP governments or the industry about the impact that the EC's price cuts or proposed timetable will have on the viability of any action plan. While there has been some dialogue with EU delegates in the region about studies on restructuring, the pace of such exchanges has not borne any relationship to the urgency implied by the time scale for change that Europe is now proposing.
As matters now stand, the EC is understood to have identified the source of funding for its action plan but is still in the process of trying to agree the quantum. It expects to disburse support on a country-by-country basis but has not progressed very far with the detail as most ACP sugar industries and governments, with the notable exception of Mauritius, have not been prepared to discuss accompanying measures without knowing exactly what the EC proposes in relation to price and the time scale for change.
How the EC decides to address issues related to the action plan and how much detail will be available in any parallel announcement in June, remains to be seen. What is clear is that the EC is discussing global sums for support that may be much lower than those estimated by some EU member-states as being required by ACP sugar producers.
For the past two years Caribbean governments and industries have for the most part made clear in European capitals and to the EC that while the region accepts change, it requires a finite transition at a remunerative price for a period that is longer than that envisaged by the Agriculture Directorate if it is to survive the process of change.
But having said this, the blunt truth is that no Caribbean industry will be able to withstand the impact of the Agriculture Directorate's new proposal: a 39 per cent cut in price over two years starting in 2006. Without a support mechanism similar to that being offered to wealthy EU farmers, the rural economy in Guyana, Jamaica and Belize could well collapse before governments and industries or the EC can even begin to develop programmes. Moreover, it is unlikely that any ACP sugar producing country will be able to successfully restructure, re-skill or develop newer industries without an adequate properly-funded preparatory period.
At the heart of this issue is the absence of any recognition in Brussels that the EC should be exhibiting the same caution or sensitivities when it comes to its external and development interests, as it does in relation to domestic producers.
The Caribbean cannot afford the collapse of an industry on which hundreds of thousands of people are dependent. Previous Caribbean experience with bananas and rum suggests that programmes for sugar are unlikely to be agreed let alone implemented until well after the two-year price transition envisaged by the EC.
All of which begs the question as to why so little is being said politically by the region in Europe.
David Jessop is the Director of the Caribbean Council and can be contacted at david.jessop@caribbean-council.org
