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EU sugar reform costs ACP and LDC sugar industries dearly

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Brussels, 19 October 2017/ ACP: The regime that manages the EU sugar market changed from 1st October 2017 with the removal of domestic quotas.  Sugar suppliers to the EU under  Economic Partnership Agreement and the Everything But Arms (EBA) Initiative, comprised mostly of small and vulnerable economies, had strongly opposed the abolition of EU domestic sugar quotas when it was first mooted in 2013.   

Commenting on the impact of the EU reform on ACP sugar exports to the EU at the 20th Meeting of the ACP Ministerial Trade Committee, the Chairman of the ACP Sugar Subcommittee and Ambassador of Belize to the EU, H.E. Dylan Vernon (pictured), recalled the recent study on the impact of the EU sugar reform on ACP suppliers carried out by Cardno ([1]), wherein it was noted that, while the final outcome of the reform is uncertain, sugar production in the EU is expected to increase.

Ambassador Vernon added, “The change in EU policy has already significantly contributed to reduced sugar prices in the EU market.  As will become evident when the statistics are available for the coming 2017/2018 marketing year, the new EU sugar policy will significantly decrease ACP and LDC imports and erode even further the price preference which has, until now, done much to foster socio-economic development in ACP and LDC countries.  At the same time, we will probably see the EU more than double the quantity of sugar it exports to the world markets, including to some of the same regional markets which Cardno suggested we should now concentrate on to market our sugar. These repercussions, and the damage already being done to our joint development endeavours, demonstrate that we have been wholly justified in our on-going critique of the incoherence of this EU policy removing domestic quotas. ”. 

The European Commission’s own Medium Term Outlook ([2]) foresaw that the lifting of the EU sugar production quotas as from October 2017 would lead to preferential suppliers to the EU experiencing lower selling prices for lower quantities of sugar as EU sugar prices are expected to become more closely aligned with and even trade at a discount to world market prices.  In addition, we may foresee that sugar prices in the EU are likely to become much more volatile.

The Ambassador further noted that continuing EU subsidies to its sugar industry, notably in the form of Voluntary Coupled Support given to beet growers in ten Member States, materially damage ACP commercial prospects in Europe.

On paper, there will be no change to the EU’s import arrangements in respect of ACP and LDC suppliers who will continue to be able to export sugar to the EU on the market access terms agreed under the Economic Partnership Agreements and the Everything But Arms initiative.  But that statis in EU trade policy does not by any means tell the whole story because duty and quota-free market access does not, alone, provide a bankable preference for ACP and LDC sugar exporters. For this to be achieved, policy coherence for development must be extended to the EU’s domestic agricultural policy as well.    

Ambassador Vernon also underlined a crucial point made in the Cardno Study on Accompanying Measures for former Sugar Protocol countries (AMSP).  He noted that the AMSP has undoubtedly helped ACP sugar producers to adjust to the new market environment but their contribution has been varied and many ACP countries were not able to achieve all the goals set out in their National Adaptation Strategies. In this regard, some ACP countries still have work to do. Indeed, some still face very considerable challenges and require far-reaching reforms to address the impact of EU reform on their local economies. 

The ACP Group calls on the European Union to propose and adopt more coherent and development-friendly policies, both as regards to EU domestic agricultural policy, as well as EU trade policy.

 


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