Today June 22, 2005, the final steps in the Sugar Reform of the European Union (EU) have been proposed by the EU Commission and publicised. For the African Caribbean Pacific (ACP) countries, it is about, severe price cuts and short implementation periods.The recommendations of the Commission now go to the Agriculture Council of the EU in November 2005 for agreement and possible adoption.

Guyana, as a member of the ACP, registers its profound dismay at the outcome of the deliberation of the Commission, not uninfluenced it may seem, by the body’s written and moral obligations to the Governments and people of the ACP group of countries.

While there is broad acceptance of the necessity for reform, the ACP countries have demanded that in the context of any reform, they should be treated in a way that relates to the importance of the EU sugar market and the growth and development of their economies and the development of their people.

Essentially, the price cuts being proposed are extreme and the timeframe too short for any success in the implementation of a reasonable assistance scheme.

We anticipate that better sense will prevail and a fairer judgment exercised when the reform proposal comes up for consideration at the level of the Agriculture Council.

The Government of Guyana, conscious of the impending reforms to the sugar regime, has during the past years been taking a number of initiatives to prepare our sugar industry.

Meanwhile, His Excellency President Bharrat Jagdeo had on June 17 written to Prime Minister Tony Blair of the United Kingdom, whose country will be taking over the Chair of the EU on July 1, asking him “to intervene on our behalf to make sure that the sugar price is not cut so drastically and that any reduction is implemented over a transitional period so that we can adapt to reform in a manageable way.”

(See below for President Jagdeo’s letter to Prime Minister Blair)

OFFICE OF THE PRESIDENT

New Garden Street & South Road
Georgetown, Guyana

June 17, 2005

His Excellency’ The Rt. Hon. Tony Blair
Prime Minister of the United Kingdom
Office of the Prime Minister
United Kingdom.

Dear Prime Minister,

I am writing you on a matter, which is of the gravest concern to us in the Caribbean Community, and hope you will be able to be of assistance.

This is the dire threat posed to sugar, by far the most important agricultural enterprise in Guyana and the Caribbean Community (CARICOM), by the European Commission’s proposals for reforming the sugar regime.

You will remember that you touched on this matter in your letter of December 29, 2003 to my colleague P.J. Patterson, Prime Minister of Jamaica, when you wrote the following:

“On trade, as I said when we met, I firmly believe that the international community must take account of Caribbean vulnerability and ensure that the inevitable changes to trade regimes are phased at a rate that does enable your economies to adjust. The UK will do all that it can to ensure this. Reform of the EU sugar regime is both necessary and desirable, but I recognise that account needs to be taken of your interests in the manner of that change. We will do as much as we can, but I also encourage you to keep in close touch with the Commission and other member states. We will continue to press the Commission to improve the rate that European Development Fund monies to assist adjustment are spent.”

We have not been formally consulted about the sugar proposals, or about the drastic impact they would have, but we have learnt in detail about them through the media and leaked documents and understand that they are to be published in legislative form on June 22 nd.

These proposals would entail a reduction in the price we receive for our exports of sugar under the Sugar Protocol of approximately 40% over the two years to 2008/09. Such a reduction in price represents for CARICOM over US$100 million loss in sugar revenue per annum. This is by far the most serious threat to the Region’s sugar industry in recent history and would wreak havoc in the rural economies in the countries involved. Already the St. Kitts and Nevis Government has been forced to am10unce the cessation of sugar production in 2005 with all that implies for its economy and society.

We are concerned that the recent WTO Appellate Body decision, upholding the ruling of the WTO Panel in the sugar case brought by Brazil, Australia and Thailand against the EU, is being used by the European Commission to justify its proposals for reforming the sugar regime. However, these rulings in no way justify the depth and rapidity of the proposed cuts in price. Indeed the WTO Appellate Body upheld the WTO dispute Settlement Panel’s view that the EU’s international commitments to the ACP developing countries must be respected. Nor does the July 2004 WTO framework agreement on agriculture in any way justify the drastic cuts proposed by the EU Commission.

Ever since the European Commission first announced its proposed sugar reform in July 2004 the ACP, with the very active participation of CARICOM, have made representations time and time again in every available forum pointing out the disastrous impact the proposals would have and putting alternative workable proposals which could be accommodated by the ACP states and their sugar industries while permitting reforms in the EU sugar regime to meet international commitments. These representations have been, in effect, ignored. Indeed the proposals now on the table call for a deeper cut in price with hardly any transition period.

We in CARICOM accept the need for changes in the EU sugar regime. Indeed sugar industries in the Region are actively engaged in pursuing strategies of adaptation including alternative uses for cane such as ethanol production, co­generation and sugar refining. But our plans cannot be implemented properly under the gun of the proposals now on the table. We propose that the cut in price must be less drastic, should begin only in 2008, and should be implemented gradually over a period of eight years to allow time to adjust our industries and prepare our economies efficiently.

The Commission has proposed an Action Plan for Accompanying Measures. This is supposed to assist in the transition period when the proposals for sugar reform take effect. However, while there has been some limited dialogue with EU delegates in the Region on the Action Plan, progress has not by any means measured up to the urgei1cy implied by the rushed changes proposed. In particular the EU has not engaged in dialogue with our Governments or industries about the impact the proposed price cuts and time-table will have on the viability of any Action Plan. What the Region needs is an adequate properly funded preparatory period if we are to adapt our sugar industries successfully.

Prime Minister, I do not need to remind you what is at stake. In the countries involved the sugar industry is absolutely vital in providing employment in the rural areas. It is estimated that over 700,000 persons are dependent in CARICOM for their livelihood on sugar. Sugar provides vital foreign exchange ean1ings and the EU proposals threaten to cut these ean1ings sharply. 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.

We look to the British Government to intervene on our behalf to make sure that the sugar price is not cut so drastically and that any reduction is implemented over a transitional period so that we can adapt to reform in a manageable way.

The UK assumes the Presidency of the European Union with effect from July 1, 2005. We feel we can depend on you to assist in this life and death matter during your Presidency. Help in resolving this very grave problem for us would be in keeping with the UK Government’s strong commitment to assist development and the Millennium Development Goals. The European Commission’s sugar proposals run completely counter to such commitments in the case of the Caribbean.

Yours sincerely,

Bharrat Jagdeo
President of Guyana