Caribbean may sue to reinstate EU sugar deal

Inter Press Service | 11 October 2007

TRADE: Caribbean May Sue to Reinstate EU Sugar Deal

By Bert Wilkinson

GEORGETOWN, Guyana, Oct 11 (IPS) — Late last month, the European Union decided that it was no longer willing to wait on the 79-nation African, Caribbean and Pacific (ACP) group of former colonies to jointly declare the demise of a special export regime for cane sugar in place since the mid-1970s.

Instead, the EU took a unilateral decision to renounce the special Sugar Protocol that had been one of the hallmarks of trade between the ACP and the Europeans for a full 32 years.

For ACP countries, the Caribbean especially, the decision was tantamount to the worst act of betrayal the EU could have imposed on its trading partners, despite the fact that the EU had made it clear that a new protocol needed to comply with current World Trade Organisation (WTO) rules.

Heads of government like Guyana’s President Bharrat Jagdeo and Owen Arthur of Barbados expressed their disappointment with the EU’s termination of the export regime particularly because it came smack in the midst of negotiations for an Economic Partnership Agreement (EPA) that would replace the 2001 Cotonou Agreement’s special quotas and prices for sugar.

The EU had decided to break up the ACP into six different groupings, each getting its own EPA. As it stands now, the Caribbean is way ahead of the other groups in negotiations with the EU, but major stumbling blocks remain, not the least of them being the region’s concern about what would happen to bananas and sugar in the new EPA scheduled to come on stream in January.

Caribbean leaders acknowledge that Europe had been pressuring them to jointly renounce the special sugar arrangement, but no one was expecting it to come amid current negotiations and when key issues are still pending.

"Europe does not play by the rules of the game it sets itself," said an angry Jagdeo, president of the Caribbean’s largest sugar-producing country, as he promised to join with other Caribbean Community leaders to try to reinstate the sugar protocol in an international court.

Jagdeo said that Caribbean leaders who traveled to Jamaica last week for a special meeting with Peter Mandelson and Louis Michel, EU commissioners for trade and development, respectively, had a long discussion about legal steps to force Europe to abide by the original deal, at least until a new arrangement is in place. Not surprisingly, the meeting ended in deadlock.

The protocol calls for fixed prices, fixed quotas and exports running for an indefinite duration, clauses the EU says are incompatible with modern global trade rules.

When the agreement was signed 32 years ago, EU prices were at least two times lower than world market prices. Today, the EU prices are three times higher and the Europeans are complaining that ACP states are getting the best possible deal.

"Our producers took a cut in price at that time for long-term access," Jagdeo noted. "They forget the history. I think we should test the protocol in court."

It is unclear when a next round of talks with the EU will begin, but regional ministers are due to meet in Haiti later this month to continue preparations for the EPA. Some African and Pacific regions have already said they won’t wrap up the talks on time and prefer an interim agreement of some kind while pressing issues are worked out in the coming months.

Leaders say they are also angry that the EU is pressing them to open their economies to reciprocal trade, a move that would significantly change the economic dynamics of most of the 15 Caricom trade bloc members. During talks in Jamaica last week, the Caribbean states offered to liberalise 85 percent of the region’s trade with Europe over 25 years, with much of that process being completed in just over a decade. The original regional offer was around 25 percent, a ceiling Europe rejected.

The leaders say several issues are at play, not the least being efforts by the EU to bully them into signing the EPA without guarantees about key products. At stake is a market for about 325,000 tonnes of sugar from the Caribbean alone. In all, the ACP states want a fixed quota of 610,000 tonnes from the 18 countries still selling sugar and a price of not less than 335 euros per tonne, the new buying rate since the EU imposed a devastating 36-percent cut in 2006 that cost Caribbean producers 100 million dollars annually.

Richard Bernal, who heads the Caribbean Regional Negotiating Machinery, says that it is in the region’s interest to have an EPA in place by the time January rolls around.

"No agreement is better than a rushed or bad agreement, but no agreement in this case is not a good position to be in. The existing agreement ends on Dec. 31. If we don’t have something in place in the form of an EPA, automatically trading between the two sides reverts to the European general preference system (GSP), which is less advantageous. We’ll be worse off than if we are able to negotiate an EPA, which gives us good market access," he said in Jamaica.

Jagdeo and some of the other leaders think the EU is bluffing about GSPs and is forcing their hand to sign off so it can hold up the Caribbean as the first region to do so. They point out that the EPA talks are far more advanced than with other ACP regions so there is hardly a reason to punish the Caribbean alone, delegation leaders said.

Bernal differs slightly from some heads of government, saying that the deal was largely finished, barring details about market accces for goods. He says authorities are to take some blame for this.

"In that respect, the region has been slow to take certain decisions and, therefore, we have not yet put a complete market access offer on behalf of CARIFORUM" (including the Dominican Republic)," he said.

source: IPS