Supplementary memorandum submitted by
the ACP London Sugar Group (O 78A)
1. INTRODUCTION
This paper is divided into two parts: the first
one is entitled: "Clarification of some points which emerged
during the evidence session"; the second part is devoted
to "Other issues". A document on the legal and historical
aspects of the Sugar Protocol which is relevant to both parts
of this paper is annexed.
2. CLARIFICATION
OF SOME
POINTS WHICH
EMERGED DURING
THE EVIDENCE
SESSION
2.1 The paper on the legal and historical
aspects of the Sugar Protocol (annexed) would be relevant as background
to the question put by Mr Drew at Q 118 on the moral and other
obligations.
2.2 The following points on what we perceive
to be the UK Government's policy on multilateral issues relevant
to ACP preferential access could be made.
(b)
It does not support or supports in a very lukewarm
way the concept of vulnerable categories such as Net Food Importing
Development Countries (NFIDCs) and Small Island Developing States
(SIDS) which are not only part and parcel of the WTO system but
which are also crucial for the ACP.
(c)
It does not support either proactively or actively
the concept of preferential access and makes no sustained effort
to maintain and safeguard the benefits of Cotonou (Article 36
(4)); of ACP preferences (para 2.11 of annex A of the Derbez text
and para 16 of Harbinson II), in the context of the WTO negotiations.
(d)
Nor does it support actively the maintenance of instruments
which would safeguard ACP access to the EU market: moderate tariff
reduction, special safeguard clause, peace clause etc.
(e)
Its attitude is one of fatalism and consists in providing
for accompanying measures in case of preference erosion.
It is not enough to provide for "compensation"
when and if erosion takes place. We would like the UK Government
to adopt policies which would prevent erosion from taking place,
which would safeguard and maintain the benefits the ACP derive
from preferential access and such policies would have to be implemented
in a proactive and active way.
2.3 Equally, the UK Government's approach
to the sugar regime seems to be marked by a desire to achieve
radical reform at almost any cost: "the Government is minded
to approach sugar reform in the same spirit [as CAP reform], seeking
a more liberalised regime, open to market forces and with prices
closer to world levels." The UK Government accepts that this
will profoundly disadvantage all traditional ACP suppliers but
does not address the issue of how this is to be squared with its
commitments to defend the interests of the ACP States Signatory
to the Sugar Protocol (see section 3 below).
2.4 ACP Quotas
Please see the paper in the historical and legal
aspects of the Sugar Protocol (Annexed) and refer more specifically
to Article 3 (2) of the Sugar Protocol which states: "Subject
to Article 7, these quantities may not be reduced without the
consent of the individual states concerned."
2.5 Diversification
A quick reference list of the criteria to assess
the role of Diversification products capable of replacing sugar
would be as follows:
— Resistance to cyclones, droughts,
diseases and pests; Adaptation to environment.
— Higher value added locally and net
export receipts.
— Agro-industrial base: agricultural
and industrial culture.
— By products: molasses (ethanol) and
bagasse (electricity).
— Role of sugar in economy (GDP, employment,
. . . etc).
— Multifunctional role and socio-economic
importance.
Other economic sectors than agriculture can
be fragile: the end of the multifibre Agreement will liberalise
the preferential access of the ACP for textiles whilst tourism
can be affected by terrorism and by the post 9/11 situation. A
stable sugar sector continues to be essential in many ACP countries.
3. OTHER ISSUES
3.1 Of the issues of interest to the Committee
which were not covered in the evidence session, the following
should be noted:
— What are the EU and UK obligations
to the ACP countries?
— Will the fact that the UK will be
representing the ACP in negotiations in Brussels mean that cane
sugar interests are under-represented?
3.2 What are the EU and UK Obligations to
the ACP Countries?
Please refer to the annex [not printed] on the
legal and historical context of the Sugar Protocol. The three
major agreements which define the obligations of the EU and UK
obligations to the ACP countries are the following:
3.2.1 Protocol 22 of the UK Accession Treaty
provided for the safeguarding of the ACP interests and was a "specific
and moral commitment" that the Commonwealth Sugar Agreement
would be integrated into the EEC system. The UK assurances given
in 1971 were "double banked" by the Community/s Commitment
and the Sugar Protocol came into being in 1975. One quotation
would sum up the importance of this protocol: "The Community
will have as its firm purpose the safeguarding of the interests
of all the countries referred to in this Protocol whose economies
depend to a considerable extent on the export of primary products,
and particularly of sugar. The question of sugar will be settled
within this framework, bearing in mind, with regard to exports
of sugar, the importance of this product for the economies of
several of these countries and of the Commonwealth countries in
particular."
3.2.2 The Sugar Protocol
The main guarantees contained in the Sugar Protocol
are the following:
— Import Quotas of some 1.3 million
tonnes.
3.2.3 The Cotonou Agreement
Article 36 (4) which relates to commodity Protocols
including the SP is probably one of the most important provisions
of the Cotonou Agreement as far as ACP sugar is concerned.
"In this context, the Parties reaffirm the
importance of the commodity protocols, attached to Annex V of
this Agreement. They agree on the need to review them in the context
of the new trading arrangements, in particular as regards their
compatibility with WTO rules, with a view to safeguarding the
benefits derived therefrom, bearing in mind the special legal
status of the Sugar Protocol" (emphasis added).
The concept of safeguarding the benefits of
the Sugar Protocol is particularly important for the ACP.
3.3 Will the fact that the UK will be representing
the ACP in negotiations in Brussels mean that cane sugar interests
are under-represented?
The ACP have their own joint structures and
fora in order to meet the Commission, the Council of Ministers
or the Parliament and they will, of course, be lobbying their
counterparts in order to make their interests and suggestions
known to the EU.
But, at the level of the member states, the
ACP will certainly count on the UK to champion its cause for all
the reasons which have been put forward in our memoranda and during
the evidence session.
There are indeed only five refining countries,
according to the definition of refining in the present regulations
and in the enlarged EU, this would represent a minority of 5/25.
But with the EBA Initiative (or the LDC recent offer) it is evident
that the role of refining will become more and more important
and could represent as much as 15% of consumption.
The UK because of Tate & Lyle European Cane
Sugar has traditionally had considerable weight in this respect
and it is expected that it will continue to wield substantial
influence on account of the greater role refining will be called
upon to play in a new sugar regime. It is not clear, in this connection,
what role beet factories will be called upon to play in this new
environment.
But the interests of the ACP suppliers should
be considered as important as those of the port refiners and of
the beet processors. They should not in any way be subsumed into
either category but should be considered distinctly and separately
as well jointly with those of their other economic partners.
This is why it is important that the UK should
take into consideration not only the interests of TLECs, of British
Sugar but also those of the ACP which have considerable historical,
legal , moral and socio-economic justification to deserve such
consideration.
Annex I
THE SPECIAL STATUS OF THE SUGAR PROTOCOL
All interested parties recognise the special
status of the Protocol. This is clearly spelt out in the Cotonou
Agreement, the Lomé Conventions and in other texts. The
purpose of this paper is an attempt to describe what in fact constitutes
this special status. It is divided into three parts:
1. The historical context (Protocol 22).
2. The legal aspects of the Sugar Protocol.
3. The Cotonou Agreement.
THE HISTORICAL
CONTEXT
Negotiations between Great Britain and the Six
on its application to join the Community began in 1971. Britain
had already, in 1970, tabled a proposal that specific provision
should be made to allow for the import into the enlarged Community
of the guaranteed tonnages of sugar which it had been purchasing
at a negotiated price from the developing exporting countries
whose industries were parties to the Commonwealth Sugar Agreement.
On 21 November of the same year, the European Commission had acknowledged
the need to safeguard the interests of these developing countries
and to provide reasonable access in the enlarged community for
their sugar. It suggested that the methods for implementing these
proposals should be discussed in 1975.
On 11 May 1971, the Council of Ministers of
the Six agreed on a proposal which was formulated to Britain at
a joint session on 12 and 13 May 1971. This proposal was later
enshrined in Protocol 22 annexed to the Treaty of Accession of
the United Kingdom to the European Economic Community. It was
to the effect that the enlarged community would offer to the developing
countries in the Indian Ocean, the Pacific and the Caribbean,
the choice of arranging their relations with the Community either
on the basis of their accession to the Yaounde« Convention
or through the formula of a special association of the Arusha
type or again by means of trade agreements. The case of sugar
would be settled within the framework of the relations to be established
between all the Associated States and the enlarged Community and
bearing in mind, with regard to sugar exports, the importance
of this product to the economies of several developing countries.
The text of Protocol 22 reads: "The Community will have as
its firm purpose the safeguarding of the interests of all the
countries referred to in this Protocol whose economies depend
to a considerable extent on the export of primary products, and
particularly of sugar. The question of sugar will be settled within
this framework, bearing in mind, with regard to exports of sugar,
the importance of this product for the economies of several of
these countries and of the Commonwealth countries in particular."
The French text of the proposal reads: "A cet e«gard,
de la Communaute« e«largie aura a Coeur de sauvegarder
les intéréts de l'ensemble des pays vises ci-dessus
et dont l'e«conomie de«pend dans une mesure conside«rable
de l'exportation de produits de base, et notamment du sucre."
The chief British negotiator, Mr Geoffrey Rippon,
the Minister of State at the Foreign Office, thanked the Community
for its declaration and stated that before accepting it, he would
consult the Commonwealth countries concerned. He first reported
on 17 May to the House of Commons and stated that the "The
Community's offer was a specific and moral commitment and that
the assurances which successive British Governments had given
to the developing countries had now been double-banked by the
Community's commitment". He added "I can now say this
to the developing sugar producing countries of the Commonwealth:
there would be room in the enlarged Community, of which Britain
would be a part, for present quantities of sugar from these countries
at remunerative prices and for the development of beet sugar production."
The British Government held consultations with
the Commonwealth at Lancaster House, London, in early June 1971.
In terms of the communique« issued after the meetings the
British delegation assured other delegations that the Community's
proposals constituted a specific and moral commitment by the enlarged
Community of which the United Kingdom would be a part. The British
Government and other Commonwealth Governments participating regard
this offer as a firm assurance of a secure and continuing market
in the enlarged Community on fair terms for the quantities of
sugar covered by the Common Sugar Agreement in respect of all
its existing developing member countries. The developing Commonwealth
countries will continue to plan their future on this basis. On
this basis, Commonwealth Ministers agreed to accept the Community's
proposals and stated that they would proceed accordingly, it being
further agreed that Mr Rippon would so inform the Council of Ministers
of the EEC at their ministerial meeting with the UK (8 June) and
would communicate to the Community the text of the agreed statement.
In the course of the meeting, Mr Rippon gave the assurance that
it would be the firm policy of the British government to ensure
that the proposal of the Community would be implemented in accordance
with the statement recorded above in the event of the UK joining
the EEC".
The text of the above joint declaration was
communicated to the Six at the ministerial meeting of the EEC
Council of Ministers with the UK which was held on 8 June 1971.
On 22 January 1972, on the conclusion of its
negotiations with the Six, the United Kingdom signed a Treaty
of Accession, of which Protocol 22 was a part, and became a full
member on 1 January 1973.
Negotiations between the EEC and the ACP States
started in Brussels on 25 July 1973 and ended on 1 February 1975
with an agreement on a new Convention of Association (the Lome«
Convention) between the EEC and the ACP States. The Sugar Protocol,
which had been negotiated separately, took effect on 28 February
1975 pending the entry into force of the Convention of Lome«.
The Protocol incorporated the essential guarantees of duration,
remunerative prices and export quotas which were contained in
the Commonwealth Sugar Agreement and for which the developing
sugar exporting countries of the Commonwealth had been struggling
over so many years to retain.
THE LEGAL
ASPECTS OF
THE SUGAR
PROTOCOL
Indefinite Duration
The legal aspects of the Protocol are contained
in the various clauses of the Protocol and in Article 213 of the
IVth Lome« Convention.
Article 1 (1) of the Protocol states that the
Community's undertaking to purchase specific quantities of sugar
at guaranteed prices is for an indefinite period.
As the Lome« Convention to which it is
attached was originally concluded for five years, it was provided
in Article 8 (2) of the Protocol that, should the Convention cease
to be operative, the sugar supplying states and the Community
would adopt appropriate institutional provisions to ensure the
continued application of the provisions of the Sugar Protocol.
Article 1 (2) of the Protocol states that the
implementation of the Protocol is carried out within the framework
of the management of the common organisation of the sugar market
which, however, shall in no way prejudice the commitment of the
Community under Article 2 (1), ie to purchase sugar for an indefinite
period. Indeed, it flows from this stipulation that any modification
of the EEC sugar regime cannot affect the continued application
of the provisions of the Sugar Protocol.
Article 10 of the Protocol stipulates that the
Protocol may be denounced by the Community with respect to each
ACP State subject to two years' notice. However, in a Declaration
annexed to the Protocol, the Community formally declares that
Article 10 is for juridical security and does not represent for
the Community any qualification or limitation of the principle
enunciated in Article 1(1), viz the undertaking to purchase sugar
for an indefinite period.
Article 1 (2) of the Protocol also states that
the safeguard clause in Article 10 (now Article 177) of the Convention
of Lome shall not apply. The latter article refers to the possibility
of the Community to take safeguard measures when and if the application
of the provisions of the Convention were to create disturbances
in any one or more of the member states of the EEC. This underlines
once more the indefinite nature of the Protocol since economic
or other difficulties in the EEC, which might lead to the modification
of the arrangements under the Convention, cannot lead to, or be
invoked to justify, any modification of the indefinite nature
of the commitments under the Protocol.
All the guarantees contained in the Sugar Protocol
are also enshrined in the IVth Lome« Convention which, in
its Article 213, reiterates the commitments undertaken in terms
of the Protocol, notably the indefinite duration of the
Protocol, the non-applicability of the safeguard clause under
Article 177 of the Convention, and the fact that should the Convention
be terminated measures must be taken to secure the continued application
of the Protocol.
All the above provisions, both under the Sugar
Protocol and under the Convention of Lome«, constitute very
clear, precise and juridical guarantees concerning the application
of the Protocol for an indefinite period.
The Other Provisions
Quantities agreed between the EC and each individual
ACP party cannot be reduced without the consent of the latter
except where shortfall, or absence of, deliveries are attributable
to reasons other than force majeure. In such cases the reallocation
of quantities ultimately rests with the Commission.
Access is duty free (or now at zero tariff).
The Convention ensures that no safeguard measures, increased tariffs
or quantitative restrictions, can be invoked by the EU in the
case of the Sugar Protocol. Finally, in the regulations made to
incorporate the commitments of the EU in the UR, care has been
exercised to exclude the SP quantities from any measure taken
to reduce quotas. This can happen if difficulties are encountered
to comply with the UR obligations.
While Article 5 (4) of the Sugar Protocol stipulates
that ACP prices should take into account all relevant economic
factors, a reminiscence of the terms of CSA, it is in fact the
institutional intervention (or guaranteed) prices which provide
the baseline. In fact all yearly price agreements have been concluded
on this price. All ACP transactions are of a commercial nature.
Membership of the SP is open to all members
of the Convention subject to the agreement of all parties to the
SP.
The obligations of the EC in respect of the
Sugar Protocol were to be implemented within the framework of
the Sugar Regime of the EC which governs the common organisation
of the sugar market. Necessary amendments were made to that effect
in 1975 and the SP was made an integral part of the Common Market.
THE COTONOU
AGREEMENT (CA)
Article 36 (4) which relates to commodity Protocols
including the SP is probably one of the most important provisions
of the CA as far as ACP sugar is concerned.
"In this context, the Parties reaffirm the
importance of the commodity protocols, attached to Annex V of
this Agreement. They agree on the need to review them in the context
of the new trading arrangements, in particular as regards their
compatibility with WTO rules, with a view to safeguarding the
benefits derived therefrom, bearing in mind the special legal
status of the Sugar Protocol"
The need to safeguard the benefits of the Sugar
Protocol is particularly important for the ACP.
The 1975 original text of the SP and all the
guarantees related to the Sugar Protocol are reaffirmed in the
Cotonou Agreement (see Chapter 2 Article 13 and Annex V in particular)
18 May 2004
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