29 Assistance for African, Caribbean
and Pacific (ACP) countries affected by the reform of the Community
sugar regime
| (26672)
10598/05
COM(05) 266
+ ADD 1
| Draft Regulation establishing accompanying measures for Sugar Protocol countries affected by the reform of the EU sugar regime
Commission Staff Working Document - Annex to the draft Regulation establishing accompanying measures for Sugar Protocol countries affected by the reform of the EU sugar regime
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| Legal base | Article 179EC; co-decision; QMV
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| Document originated | 22 June 2005
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| Deposited in Parliament | 30 June 2005
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| Department | International Development
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| Basis of consideration | EM of 19 July 2005
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| Previous Committee Report | None, but see footnote
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| To be discussed in Council | November 2005
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| Committee's assessment | Politically important
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| Committee's decision | Cleared, but relevant to the debate already recommended on the latest proposals for reforming the Community sugar regime
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Background
29.1 Since 1975, certain African, Caribbean and Pacific (ACP)
countries have been granted special access to the Community sugar
market under the Lome (and now Cotonou) Agreements, under which
they may export duty-free quantities at a guaranteed price linked
to that received by Community sugar beet producers under the common
market organisation for sugar. However, as we reported on 21 July
2005, the Commission's latest proposals for reforming the sugar
regime[84] would entail
a 39% cut in the internal support price, and hence in the guaranteed
price which the ACP exporters receive for their supplies. Since
this would have a significant impact on the industries in some
of the countries involved, the Commission has proposed in this
document a number of measures aimed at enabling them to adapt
to this new situation.
The current proposal
29.2 It is proposed that this assistance should be delivered through
a series of multi-annual adaptation strategies, which would be
geared to the specific needs of each country, in the light of
discussions between them and the Commission.[85]
Such assistance would be either trade-related via Economic Partnership
Agreements or financial; and, depending on circumstances, could
in the latter case entail enhancing the competitiveness of the
sugar sector, where this is sustainable, promoting the diversification
of sugar-dependent areas, and addressing broader adaptation needs.
It is proposed that the Community should support these adaptation
strategies over an eight year period, starting in 2006, and thus
span both the current Financial Perspective, and that running
from 2007 to 2013. More specifically, €40
million would be made available from the Community budget in 2006,
with a proposal for funding from 2007 onwards being made at a
later stage. However, the Commission has stated its intention
that the latter funds should be made available from the Development
Cooperation and Economic Cooperation Instrument of the External
Relations chapter of the next Financial Perspective budget.
The Government's view
29.3 In his Explanatory Memorandum of 19 July 2005,
the Parliamentary Under Secretary of State at the Department for
International Development (Mr Gareth Thomas) first addresses the
question of subsidiarity. He points out that, on so far as the
EC Treaty provides for a Community policy in the spheres of development
cooperation and of economic, financial and technical cooperation
with third countries, Title XX recognises that Community and Member
State development programmes will operate in parallel, and that
Community cooperation with developing countries will be complementary
to that of Member States. He adds that Title XXI provides that
economic, financial and technical cooperation measures with third
countries must be complementary to those of Member States, and
consistent with the development policy of the Community, and that
they provide an element of additionality, particularly for those
Member States with small aid programmes. On that basis, he says
that the action proposed here can be regarded as an appropriate
extension of the need to act at Community level to achieve the
objectives in Article 177 of the Treaty.[86]
29.4 As regards the substance of the proposal, the
Minister says that, because of the various external and internal
pressures on the Community sugar regime, the UK believes that
its reform is unavoidable. In particular, he points out that the
current regime subsidises Community growers and processors to
the disadvantage of efficient developing country exporters, and
that, because the Community adds some 5 million tonnes of "heavily
subsidised" sugar to the world market each year, this depresses
the world price, making difficult for developing countries to
sell locally as well. He also suggests that at present many ACP
producers export raw sugar to the Community even when it is not
profitable, with scarce resources often being diverted to maintaining
a sugar industry, and that the reforms proposed should create
an environment where growers make their decisions on the basis,
not of subsidies, but of their own competitiveness. They should
also enable the Least Developed Countries to benefit from the
duty-free and quota-free access which they will receive for sugar
by 2009 under the Everything But Arms initiative.
29.5 The Minister says that the indications are that
the transitional assistance which the Commission has proposed
in this document, including the level of assistance suggested
in 2006, is likely to receive broad support within the Community,
but that the ACP countries consider it to be insufficient. However,
he points out that, whilst the impact on the ACP as a whole in
terms of lost revenues and earnings in 2006 is likely to be significantly
higher than the proposed €40 million assistance, the impact
on individual countries will differ, with some African countries
(for example) being able to absorb the proposed price cut. He
says that it is for this reason the Commission envisages assistance
being based on needs rather than simply as compensation for losses,
and he adds that, until country adaptation strategies have been
submitted, it will not be possible to determine whether the money
available will be adequate.
29.6 Finally, the Minister says that the UK Presidency
hopes to take forward this proposal in parallel with the main
proposal for reforming the Community sugar regime, early adoption
being essential if domestic growers of sugar beet are to plan
their planting for the 2006 season and ACP countries are to have
access to transitional assistance as soon as possible. He says
that, because of the risk that any protracted discussions over
the suggested levels of support would result in no funds at all
being available in 2006, the Presidency will be working with the
other Member States to explore the level of funding for the ACP
countries, as well as possible additional sources of finance.
Conclusion
29.7 In principle, it is clearly right that the
Community should take steps to address the problems which would
arise for its ACP suppliers as a result of the proposals the Commission
has put forward for reforming the sugar regime, though we note
that the precise measures to be applied in any particular case
will depend upon discussions to be held between the Commission
and the country in question. For that reason, we are clearing
the document, but we regard it as relevant to the debate which
we have already recommended in European Standing Committee A on
the reform proposals.
84 (26670) 10514/05; see HC 34-iv (2005-06), para
1.8 (21 July 2005). Back
85
The countries which would benefit from this are Barbados, Belize,
Guyana, Jamaica, St Kitts and Nevis, Trinidad and Tobago, Fiji,
Congo, Cote d'Ivoire, Kenya, Madagascar, Malawi, Mauritius, Mozambique,
Swaziland, Tanzania, Zambia and Zimbabwe. Back
86
These are to foster sustainable economic and social development
of the developing countries, and more particularly the most disadvantaged
of them; the smooth and gradual integration of the developing
countries into the world economy; and the campaign against poverty
in the developing countries. Back
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