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The bitterness of sugar

The Bitterness of Sugar

Monday, April 10, 2006

by Sir Ronald Sanders

A round table discussion held in Barbados on April 3rd and 4th between CARICOM sugar producing countries and the European Union (EU) appeared to achieve the exact opposite of what it intended.

Organised by the British Department for International Development (DFID), the round table was meant to bring the two sides to a better understanding of the needs of CARICOM countries in their efforts to reform the sugar industry following the 36% unilateral cuts in the price paid for their sugar by the EU. CARICOM sugar producing countries will lose US$95 million per annum.

Instead, of the desired understanding, the round table produced a good deal of rancour.

The Barbados Agriculture Minister, Erskine Griffith, accused the EU, during a parliamentary debate after the round table, of believing they could settle issues on the basis of “the old colonial mentality”.

This followed a statement to the press on the first day of the round table by Ambassador Amos Tincani, Head of the EU Office in Barbados and the Eastern Caribbean, that if Barbados did not put up a viable strategy by April 30th it would lose €2.074 that had been budgeted for it as compensation or what the EU creatively calls “accompanying measures”.

The Barbados Minister directly reproached Ambassador Tincani declaring that he should look to his country (Italy) and France which are “two glaring examples” of inefficient agricultural production. And, he insisted that Barbados would submit its strategy on time, but it would not be a “funeral” grant since the Barbados government had no intention of “burying” the sugar industry.

Only Guyana and Jamaica have so far submitted their sugar reform strategies to the EU. Belize, Barbados, Trinidad and Tobago and St Kitts-Nevis are all expected to do so by month end, and each of them presented the outlines of their plans at the round table.

Representatives of other CARICOM countries who attended the round table described it as “largely a public relations exercise to fulfil a commitment made by British Prime Minister Tony Blair when he met CARICOM Heads of Government in London late last year”.

Mr Blair had undertaken to fight in the EU for €250 million per annum for the African, Caribbean and Pacific (ACP) sugar producers for the period 2007-2013.

With the best will in the world, Mr Blair was unlikely to achieve that objective. The present EU of 25 countries comprises many states with no historical connection to the Caribbean and little interest in its problems. In any event, big players, such as Germany, are also less disposed to being sympathetic to the region, and by all accounts the German representative at the Barbados round table did not hesitate to demonstrate this.

CARICOM delegations to the round table wanted to hear clear and definitive answers from the EU representatives on three matters: what would be the quantum of compensation; will it be front-loaded, i.e., will the money be disbursed up front; and will the compensation be timely and freed of EU red-tape as occurred with bananas?

They went home with no clear answers from the EU and with a great deal of bitterness over the two-day encounter.

The EU Commissioners have proposed €190 million per year as compensation for the period 2007-2013 - €60 million less than Mr Blair had envisaged, and it is being said in the corridors that the figure is more likely to be €120 million divided among all 18 ACP states.

So, one way or the other CARICOM sugar producing countries will not get the level of compensation to which they feel entitled.

But whatever the amount of money, the important point is that they need it up front if their reform programmes are to work. Delays in the delivery of compensation will derail reform programmes causing unemployment and revenue loss to intensify.

The Chairman of the Guyana Sugar Corporation, Ronald Ali, is reported as saying that if the funds are not in place, Guyana could fall below the production of its allocated 300,000 tonnes."

The EU’s reluctance, so far, to make a firm commitment to frontloading compensation is being viewed in the region as “ominous”.

Amid the concerns expressed publicly by a few and privately by all CARICOM delegates over what the EU will do about compensation, the President of the Caribbean Development Bank, Dr Compton Bourne, who attended the round table, was pretty blunt about the Caribbean’s own need for action.

Dr Bourne said, “The fact of the matter is that the global sugar industry has changed, as a consequence of which Caribbean participants in that industry must also change. In economic life there are no constants”.

And, he added, “We should not allow the circumstances of EU price reform to deflect us from the essential issue, namely how should economies adjust to the structural changes in the global industry and to changes in the EU market specifically.”

Dr Bourne was right to focus Caribbean attention on the need to adjust and change in their own interest. The strategies for reform that the countries have developed, shows that even though belatedly, they are swallowing the bitter pill that the unilateral EU price cuts of sugar prices have become, and they are putting the reform programmes in place.

But, the CARICOM sugar producing countries have a legitimate right to be concerned about the success of their reforms, if the EU does not deliver adequate compensation, up front and in a timely manner.

The rancour that emerged from the Barbados round table indicates worsening relations between CARICOM and the EU even as they are in the process of negotiating an Economic Partnership Agreement (EPA).

The EU can recover this situation by acting now to provide adequate funds - up front and free of burdensome conditionalities - before the full impact of the price cut makes the issue of sugar even more bitter than it now is.

Sir Ronald Sanders is a business
executive and former Caribbean
diplomat who publishes widely
on small states in the global
community. Reponses to:

 source: Caribbean Net News