Byron Buckley& Ross Sheil, Staff Reporters
Forty thousand workers directly employed in the sugar industry are expected to be heavily impacted by the European Union's proposal to cut the price of sugar imported from Jamaica and other developing countries. - CARLINGTON WILMOT/FREELANCE PHOTOGRAPHER
THE EUROPEAN Commission yesterday offered to set up a 40-million euro ($3 billion) fund to assist Jamaica and other sugar producing countries in the 18-member African Caribbean and Pacific (ACP) grouping cope with a pending reduction in sugar prices. The fund is applicable for next year only, after which further assistance will be considered.
Announcement of the sugar assistance fund was made simultaneously with the formal proposal of a two-step cut in sugar prices totalling 39 per cent in what European Union (EU) importers will pay ACP sugar producers for their product. Under the EU proposal, the price of sugar will move from 632 euros ($47,400) to 506 euros ($37,950) per tonne in 2005/2006. In 2007-2008, the price of the commodity will decline to 421 euros ($31,575) per tonne.
Jamaican sugar industry officials say 40,000 direct jobs could be lost as a result of the impending price cuts, and approximately 250,000 persons could lose some indirect income.
COMPENSATION
The European Commission (EC) sugar reform proposals, which were formally announced in Brussels, Belgium, include compensation for European sugar producers equivalent to 60 per cent of the price cut. The EC is reforming its sugar market in light of pressures from the World Trade Organisation (WTO) to dismantle preferential trade arrangements as well as the need to modernise European domestic sugar industry.
Commenting on yesterday's announcements, Louis Michel, EU Commissioner for Development and Humanitarian Aid, said: "We fully understand that the EU sugar reform is a serious challenge for many of our ACP partners. The proposed assistance scheme will help them to secure a smooth transition, in the framework of a local strategy for sustainable development."
In a press statement, the EC said it "proposes to start implementing the assistance scheme as soon as 2006, as early investments in these countries will maximise their chances of successful adjustment".
TOTALLY INADEQUATE
But yesterday Jamaica's Foreign Affairs Minister K.D. Knight told The Gleaner from Brussels that the EU proposal was "totally inadequate". Noting that the EU had breached a legally-binding contract - the 1975 Sugar Protocol -, Mr. Knight hinted at possible legal action. "We have to examine all our options," he declared.
In a statement prepared in advance of the EC's announcement, Clement Rohee, ACP and Caribbean Community (CARICOM) spokesman on sugar, restated concerns about the adverse socio-economic impact of the proposed price cut on the affected countries. He noted that the sugar industry was the single highest contributor to Gross Domestic Product (GDP) in some ACP countries and its demise would have disastrous economic effects.
"It is impossible to overstate the devastating impact the price cuts and time scale proposed by the Commission will have on ACP countries. As far as the ACP is concerned, the proposed reform is too fast, too deep, and too soon," said Rohee, who is the Minister of Foreign Trade of Guyana.
Yesterday both Ambassador Derrick Heaven, head of the Sugar Industry Authority and Allan Rickards, chairman of the All Island Cane Farmers Association, said they expected the final decision by the EC, to be taken in November by the Agricultural Council, to be less severe.
My reaction is that the diplomatic activity is being carried out well and the European ministers will not broker the agreement in full. I fully expect the cuts and the transition period to be less severe than as intended in the proposal, Mr. Rickards told The Gleaner yesterday. He was among local sugar officials who recently mounted a demonstration at the British High Commission against the proposed sugar cuts.
Possible impact of price cut
Loss of 400 million euros in annual income of ACP countries
Loss of daily earnings of under 2 euros ($150) per sugar worker
