Annex 1
Address to the Council of Agriculture
Ministers of the European Union, meeting in the margins with ACP
and LDC Ministers on 24 January 2005, by Mr Graham Clark, Director,
Illovo Sugar Ltd, Chairman of the LDC London Sugar Group
Mr President, honourable Ministers, Excellencies,
distinguished colleagues;
The Everything But Arms initiative(EBA) in relation
to sugar captures not only the true spirit and essence of sustainable
development in the poorest countries in the world but is a working
model of what the LDCs so desperately require in their fight to
lift themselves from being the poorest of the poor.
The European Commission proposals for the reform
of the sugar regime pose a threat to the fundamentals of LDC development
and have prompted the LDCs to propose what in their opinion is
a reasonable and meaningful adaptation of EBA.
Rural development, poverty alleviation, food
security and the beginnings of a better quality of life for those
who need it most can already be seen in the LDCs who have been
able to take advantage of this opportunity to date.
In countries as widespread and diverse as Mozambique
and Malawi, Zambia and Tanzania, Ethiopia and Sudan, Togo and
Benin, Bangladesh and Nepal, Burkina Faso, the Democratic Republic
of Congo and Madagascar, sugar has been exported to Europe, in
most cases for the first time, and is making a difference.
A remunerative price and a predictable level
of export earnings is enabling those sugar industries to consolidate
and undertake expansion and modernization.
The request of the LDCs for accelerated but
managed market access over an extended transition period in conjunction
with a more modest and gradual reduction in price, together with
a plea to defer duty-free and quota-free entry for sugar of LDC
origin, is a position which has not been taken lightly.
Widespread consultations between LDC governments,
sugar cane farmers, sugar producers, investors and NGOs have concluded
that participation in an orderly managed market over an extended
transition period, would create and enhance the predictable investment
environment necessary to build capacity in these sugar industries
and thereby transfer benefits to the widest number of people in
these poor countries. Companies such as Illovo Sugar have already
invested many millions of dollars in a number of LDC sugar industries.
Having taken account of the high investment risks, and having
evaluated EU market opportunities, they require the predictability
envisaged by the LDC proposal to sustain their current investments
and to enable them to commit further investment.
The economies and in particular the administrative
capacity of most LDCs are fragile and weak. Against this backdrop,
and in a system of quota free and duty free access, the opportunities
for arbitrage trading and carousel or swap trading would flourish.
Improper trading practices and abuse of rules of origin would
be difficult to control, and considerable disruption and instability
could result in the EU sugar market, whilst in the LDCs themselves
the financial benefits would be trapped in the hands of relatively
few traders, rather than filtering down as returns to farmers
and producers and the communities in which they operate.
Managed market access under controlled conditions,
over a meaningful transition period, would avoid this situation,
limit market instability and enable the LDCs to build capacity
at both the productive and institutional level. The ability to
fully supply domestic and regional export markets could also be
developed in this timeframe so as to further sustain and diversify
sugar revenues in the LDCs.
The level of price reduction proposed by the
European Commission would nullify the LDC's proposal as presented.
In addition it is our view that combined with a short implementation
period and unchanged EBA regulations, the majority of small, vulnerable
LDC producers will be excluded on a cost and freight basis, whilst
other LDC producers in a position to do so would have no choice
but to maximize export volumes adding further potential for instability
in the EU market. Regulated and managed market access for LDCs,
together with remunerative prices, would facilitate a fairer spread
of market opportunity to all LDC producers through the internal
allocation mechanism for quantities currently adopted by the LDCs
in solidarity with each other. The ability to establish defined
market access for LDCs will also support anti-fraud measures,
strengthen rules of origin, and give fair opportunity to all farmers
and producers internally within the EU, and in ACP and LDC regions.
The LDCs have at all times held themselves available
for negotiation and further clarification on their proposal. We
wish to take this opportunity to re-state our readiness to play
a meaningful part in the GSP review and in the debate on the reform
of the sugar regime. Our view on price reduction is that this
should be gradual and modest, which would be possible within the
expected WTO commitments of the EU.
Quantitative access for LDCs during the proposed
transition period could be accommodated by a modest reduction
in EU beet quotas. Furthermore, the raw cane sugar requirements
of future new EU Member States will also offer an added market
access opportunity.
Our proposal is WTO compliant, within the findings
of the WTO Disputes Settlement Panel which has ruled in favour
of differentiation on behalf of Least Developed Countries. The
maintenance and expansion of preferential access is also consistent
with the Doha Development Agenda.
The future prosperity of LDCs is largely dependent
on investment from the private sector, reinforced by public/private
sector cooperation.
Predictable market opportunities as contained
in the LDC proposal would create the right environment for investment
and sustainable development.
I thank you.
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