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By Sir Ronald Saunders |
London, July 3, 2005: CARICOM countries have been active in the last few months in Europe trying desperately to persuade European Union (EU) countries to reconsider proposals by the European Commission to cut the price paid for sugar. If the proposals are implemented they will undoubtedly cripple the economies of many small and vulnerable African, Caribbean and Pacific (ACP) states.
But, the brave efforts of CARICOM representatives and their colleagues from Africa and the Pacific have not had much success so far.
Indeed, on June 22nd, the European Commissioner for Agriculture, Mariann Fischer Boel, presented proposals to the European Parliament which indicate that the Commission is adamant on carrying through its proposals for sugar reform including cutting the price paid for sugar by 39% over four years staring in 2006.
If these proposals are implemented, ACP countries would lose US$483 million annually. Caribbean sugar producers alone would lose US$100 million per year. Hardest hit in the Caribbean would be Guyana, Jamaica and Belize. These countries simply could not replace the lost earnings, nor could they absorb the high unemployment that would result. The level of economic dislocation and social unrest could be almost unmanageable.
St Kitts has already announced that it is closing its sugar industry; Trinidad will likely do the same and Barbados is examining ways of diversifying the industry. These countries too will suffer economic dislocation and a rise in unemployment.
Therefore, it is understandable why some of the ACP countries are contemplating legal action against the EU probably by some form of arbitration or at the International Court of Justice.
Those who favour legal action argue that Sugar Protocol between the EU and ACP countries "is a long standing intergovernmental contractual agreement of indefinite duration". They believe that unilateral action by the EU to change the legal and political commitments enshrined in the Sugar Protocol would be wrong in law.
It would mark a chilling departure in the relations between the European Union and ACP states if legal action had to be pursued, and it has to be hoped that matters do not reach that point.
The ACP countries have told both the European Commission and member states of the EU that they do not object to the principle of reform. Their great concern is that the proposed cut in the sugar price is "too deep, too soon and too short".
Concern has also been expressed that the EU is using a recent World Trade Organisation (WTO) decision on EU subsidies to its beet sugar farmers to justify the cut in price paid for ACP sugar.
But, the WTO decision specifically said that the EU's commitment to ACP developing countries must be respected. There is, therefore, no WTO requirement to cut the prices for ACP sugar entering the EU.
At a meeting in Brussels on 21st and 22nd June, ACP Ministers said that the European Commission had completely ignored proposals made by the ACP sugar supplying states about the future EU sugar regime.
The ACP proposals are that the price reduction should be less than the 39% being planned by the European Commission; it should start in 2008 and not 2006; and it should be spread over eight years and not four.
This would seem to be a remarkable offer by ACP countries given the fact that they have a legally binding agreement with the EU which did not contemplate price reductions and was open-ended.
What is more, the ACP proposal would give their sugar producers the time required to complete the overhaul and modernisation of the industry on which they are already embarked.
Now, the European Commission has also said that it would launch an assistance programme with an initial budget of US$48.3 million earmarked for 2006 but spread among 18 ACP countries. The Commission says it is also committed to longer term assistance for the period 2007 to 2013, but no amounts have been disclosed.
There are two major concerns about the EU's announced programme of assistance.
First, it is very small. US$48.3 million, however it is divided among 18 countries will not compensate them for the earnings they would lose from the prices cuts.
Second, EU procedures for disbursing aid are notoriously slow and cumbersome. It could be years before funds actually reach the affected countries and their producers.
With this knowledge, ACP countries have called for funding to be delivered before the implementation of the price cuts and other requirements for reform.
The two sides now seem to be at a stalemate. There is unlikely to be any great movement by the European Commission particularly now that legislative proposals have actually been made to the European Parliament.
Caribbean governments and sugar producers and their colleagues in Africa and the Pacific have to begin to raise the political temperature on the sugar issue within European Union capitals.
This means that there must be more high profile visits to Europe to knock on the doors of Heads of Government and other appropriate Ministers. The effect on the vulnerable ACP economies must be explained to them in detail. A similar exercise has to take place with key members of individual national assemblies and the European Parliament itself.
But, beyond the government and legislatures, a greater attempt has to be made sensitise the people of the European Union countries to the calamity that will befall many ACP states unless the European Commission accepts the ACP compromise for the reform of sugar.
Public Relations firms may already have been engaged in major European capitals to help get the ACP message into the public domain.
The effort still has to be made with the governments, the legislatures and the media. To do so, will require a collective effort of all Caribbean countries, whether or not they produce sugar.
The extreme difficulties that will be created in Caribbean sugar-producing countries will not be restricted to them alone.
President Bharrat Jagdeo of Guyana recently pointed out to Britain's Prime Minister, Tony Blair, that "over 700,000 persons are dependant in CARICOM for their livelihood on sugar. Sugar provides vital foreign exchange earnings. Sugar's essential and wide ranging multifunctional role in our rural communities is at risk with all that implies in the form of migration to urban areas already difficult to manage, greatly increased crime and growing social stability".
Mr Jagdeo could have added that decreased earnings in the CARICOM sugar producing countries will affect their ability to purchase goods and services from their CARICOM partners, causing a knock-on effect in their economies.
What is more, the Caribbean region, in which crime and security problems arise from increased poverty in some countries, will become less attractive for investment and tourism, particularly as the area moves to a Single Market and Economy.
European Union countries should heed the warnings from the ACP. They are not hysterical; they come from a keen awareness of how vulnerable their economies are to drastic changes in earnings and employment; they also know the pressures that they are facing in containing violent crimes and maintaining security while trying to deliver education and health services and infrastructural development.
In terms of sugar, the ACP has not asked the European Union to shoulder this burden alone, or even to give aid to address it.
Instead they have offered a reasonable compromise that would sustain ACP development through trade.
It would be an enlightened Europe that embraces the ACP position.
(responses to: ronaldsanders29@hotmail.com)