REPORT ON THE 10^TH SPECIAL ACP MINISTERIAL CONFERENCE

ON SUGAR, APRIL 29-JUNE 4, 2007, NADI FIJI.

 

1.                  The  10^th Special ACP Ministerial Conference on Sugar  was held in Nadi , Fiji from April 29-may 4, 2007 . Deliberations was conducted under the theme “ Managing the Challenges of Reform in the Sugar Sector”. 

 

2.                  Deliberations focused on the sustainability of the ACP sugar industry, alternative use of  sugar / sugar cane  and the EC ‘s recent market access offer in the context  of the negotiations on Economic partnership Agreements with the EU, developments regarding the ACP action plan  on Accompanying measures  and progress on research and Development   issues under intra-ACP cooperation.

 

3.                   These discussions were undertaken  in the context of solidarity and unity within the ACP  and  the desire to uphold sugar protocol countries interests across the ACP.

 

 

4.                  Key issues arising from the Conference are:

 

 

(A)       The EU Sugar Regime:

 

In the context of the EU’s  new Sugar regime and in particular its implementation from the current  marketing year 2006/2007 up to 2014 / 2015. In the  current  year / period  there will be a 5.1% reduction in the reference price of sugar. The 2006/7 price will be retained at the same level for the marketing year 2007/ 2008.  In the succeeding years, the prices will be reduced  progressively  by 9.2% in 2008/9 and 21.7% in 2009/10. Within this context, a number of issues were strategised upon namely:-

 

(a)               Market Balancing in the EU.

 

The EU’s Director of Trade , Mr Falkenberg in his presentation  and in other presentations  from representatives  of the EU side, signalled the difficulties the EU authorities   are experiencing in Meeting their objective of the reform as it relates to market balancing and the adverse effects such balancing  will have on prices.

The Conference in its assessment,  and the concerns raised the EU beet  and sugar stakeholders, re-emphasised the need  to ensure predictability and stability in prices  at least up to 2014 / 2015 period.  This was considered necessary  to sustain the level of investments in the ACP countries  within the context of the adaptation strategies .

 

To ensure that the EU’s problems  with its internal market balancing  and its actions  to deal with the imbalance  do not adversely  impact on ACP preferential access in terms of market access and guarantee prices, it was agreed that  the situation be closely monitored  and to pursue increased representation to the EC Commission  and member states  to safeguard the interest of SP suppliers.

 

(b)               ACP Guarantee Price Negotiations:

 

The ACP SP states and the EC will continue to negotiate guarantee prices in the future.  The ACP is currently seeking to establish , in keeping with the SP, an appropriate framework  for the negotiations of the guarantee prices  and one that will become effective from the current 2006/2007 regime.  The objective is to seek to obtain the best possible guarantee price which will take into account all relevant  economic factors  in keeping with the protocol provisions.

 

In the current engagement with the EU, the ACP is seeking to incorporate the increase in transport / freight costs .

 

In the past the ACP did not engage the EC in negotiations  of prices. The insertion into the process is to ensure that the region is not placed in a more disadvantaged position  by  the prices to be dictated in the new regime which  will set a precedent under the new regime.

 

The EU offer  is summarized below:

 

 

 

Period of Offer	Raw sugar	White Sugar	Comment
2005/ 2006	€523.70	€646.50	Agreed in 2006
2007/2008	€496.8	€631.9	Negotiations ongoing.

 

 

No agreement is reached  for the 2007/8 delivery period. The EC is seeking the ACP’s concurrence  to use the traditional procedure  on the basis that no conclusion  could be reached  after three meetings of the two sides.  The Conference in examining the matter  felt that the EC’s objective  is to align the new regime  to the overall CAP  and is not necessarily intended  to form a basis  for the determination of an offer on ACP guarantee price. Notwithstanding, Ministers noted that the offer does not take into account  the provisions of Article 5(4) of the Sugar protocol  , which requires that all relevant economic factors be taken into account. .

 

The Conference agreed that interventions are necessary at the political levels. This is to ensure that on the first year of the new regime, it is more than ever  of greater importance  to ascertain that  Article 5(4)  is adhered to . To effectively engage the EC, the Conference agreed to Guyana’s proposal that  a well  thought out case be made  which will  be presented as a counter proposal    and that all the relevant economic factors  be clearly defined. Consideration is also to be given to other means  of support  if the EC does not  improve on its price offer.  

 

 

 

            B.        Action Plan on Accompanying Measures;

 

Thirteen countries submitted multi-annual adaptation strategy  and  will be receiving support for 2006.  Of the five countries that had not submitted earlier, two have since  submitted plans, with the support of the EC, and are therefore expected to receive benefits form 2007 onwards. Based on reports at the Conference,  St Kitts and Nevis is the only Member State that received the 2006 allocations but this was done on the imposition of serious conditionalites-  (IMF, good governance and offshore financial requirements) which St Kitts and Nevis was able to negotiate.

 

 

The Conference while welcoming the allocations proposed by the EC  for the period 2007/10  and expressed disappointment and concerns  that  the level of funding  is much lower that that approved by the EC Council  and Parliament.

     

Common Issues of concern on the ACP side pointed to the EC ‘s undue administrative  burdens and conditionalites  which could jeopardized the  successful implementation  of the multi-annual adaptation strategies.

 

The ACP called for the rollover of funds and that funds  which was not used in a particular year be accessed in the other years. The  backloading of funds was identified as an area that could pose tremendous difficulties  to undertake the necessary adjustments  in keeping with the multi-annual adaptation Strategies  and that this will affect the SP countries to effectively adapt to the reform.

 

With respect to flexibility to be incorporated in the action plan, the EC representatives assured the Conference that countries are free to adjust their plans  (since it is theirs). In the context of what Guyana considered a liberal framework the issue of the level and source of funding was raised.  Specific reference was made to the unutilized Funds in the 8 and 9^th EDF and call for the use of such funds  to top up the allocations  to at least the € 200 million requirement  on a yearly basis.

 

It was clear that the EC would not provide the expected financial needs. The EC representative stated that the EC is committed to provide very clear amounts and to maintain  that level of support  (as indicated) . The expectation is that private capital  and investment  and co-financing will be required of the SP countries.  If this in not the expectation, the EC representative indicated then the countries have to review their strategies and plans. 

 

The Conference agreed that in keeping with the above discussions,  that a response be sought from the EC ‘s President on the topping up of resources  that was raised by the ACP Council in December 2006.  Such a response will inform the ACP Ministerial Council in May 2007 .

 

The ACP will continue to engage the EU  to ensure that funds are front loaded  and at a level agreed upon by the EU Parliament  for the 2007/13.  Efforts will also be made by the ACP to secure de-committed funds   and that the matter will be raised by the ACP in the Development Finance Committee Meetings in Brussels.

 

 

 

C.        EPA Negotiations:

 

In reviewing the status of negotiations in the different geographic regions present at the Conference, it was noted that the CARIFORUM region appears to be ahead of the negotiations  than the other regions. One difficulty identified is that the EC has been slow in responding  to proposals submitted by some regions . Generally, there remain a number of significant issues  (in all regions) that are yet to be resolved if the negotiations are expected to be completed by December 2007.

 

On the EC current market access offer on the table, the opportunity was sought to have clarifications DG Trade of the EC. The ACP Study on the different options was also presented by the Consultant Mr. Thornhill..

 

The following were noted:

 

• The  (current ) offer is an attempt to unilaterally  abolish  the SP from October 2009 and it is not  in keeping with Article 36(4) of the Cotonou which call for a joint review of the Protocol  to safeguard the benefits bearing in mind the Protocol’s special legal status.

 

• The need to safeguard the tangible and intangible benefits –as elaborated in the ACP Thornhill Report –agreed quantities, guarantee prices, indefinite duration , exempt form safeguards  and the EC’s obligation to be the buyer of the last resort.

 

• The Joint Review be conducted at the earliest opportunity

 

·        The EC’s  a concrete proposal  as to how it will safeguard the benefits of the SP be sought  and this will be further discussed by Ministers   at the Joint ACP/EC Meeting scheduled for May 2007.

 

·        The offer does not guarantee the benefits under 36(4).

 

·        The major concern is to maintain the current benefits  and seek  greater benefits in any negotiations.

 

The EC’s objective seems to be the reduction of prices  and  it was noted that after 2015, there could be further  reforms in the EU sugar.

 

The Conference agreed that:-

 

• The continued examination of the options available to the ACP.

• The legal issues will be examined at the may 2007 meeting.

• The ACP Consultative Group to write the EC  to have a review undertaken  and to seek clarification of the EC current offer  and the modalities for delivery.

 

• A Joint Technical Meeting (EC/ACP) in advance of the Minister  May 2007  Meeting will be convened.

 

• The Consultative Group on Sugar in Brussels will develop afall back position on prospects for the maintenance and development of preferential access in the event that EPA introduction is deferred

 

• A Ministerial Lobby Mission will be arranged for the EU at the May meeting.

 

 

 

D.        Treatment of Shortfalls:

 

The Conference was updated on the St. Kitts and Nevis Shortfall and the agreement reached within the CARICOM region for its distribution.

 

Trinidad and Tobago has notified –DG-Agriculture of the EC that  it is seeking a temporary shortfall for 17,716.60 mt of raw sugar for the delivery period  2006/2007 and that it could supply 30,000mt  to be delivered by June 30, 2007.

 

Congo has not declare a shortfall.

 

The distribution of the Trinidad and Tobago’s shortfall will be further examined in keeping with the ACP Special Ministerial Council decision in December 2006.

 

All shipments under the shortfall (Trinidad and St Kitts) should be made by June 30, 2007.

 

 

E.         Intra-ACP projects:

 

Eleven of the  15 Projects submitted by the ACP to the EC  was approved but the distribution of the € 13 million for the projects  is not yet finalized.

 

Guyana is identified under one Project . Not withstanding, the projects will be of  benefit to all ACP sugar protocol and sugar producing states.

 

For the non-approved Projects  efforts will be made to influence a positive response from the EC . The Chairman of the ACP Scientific Committee was mandated to initiate discussions  with  the EC AIDCO.

 

It was also agreed that efforts should be made to utilize all outstanding funds before the sunset clause and that  the financing of equipment  for a bio-plastic project  and other new projects –e.g bagasse gasification be examined.

 

The ACP / EU Joint Council will review development in May 2007.

 

 

 

F.         Other Issues:

 

• Guyana’s proposal to be the venue for the 11^th ACP Sugar Ministerial Conference scheduled to be held in 2009 was accepted by the 10^th Ministerial Conference.

 

• Jamaica during the course of the Conference engaged the Chairman of the ACP Consultative Group on Sugar , Guyana and Belize on a reconsideration of the St. Kitts shortfall on the basis that it is in a position to supply (currently).

In this regard,  Jamaica advised that it has written the Chairman of the Consultative Group to withdraw the letter dispatched in March 2007 to the EC .

 

No decision was taken. It was agreed that the matter be addressed at COTED on 16^th and 17^th  May 2007.

 

 

 

MOFTIC

May 6, 2007.