Agreement reported for information
International Sugar Agreement, 1992—Articles for Reform
(CP 825, 2023)1
1.The Articles for Reform of the International Sugar Agreement 1992 were laid on 24 March 2023 and the scrutiny period is scheduled to end on 18 May 2023. It was considered by the Committee on 11 May 2023.
Background
2.The International Sugar Agreement (ISA) 1992 established a reformed International Sugar Organization (ISO), which is an intergovernmental body based in London with the aim of enhancing international cooperation in connection with world sugar. The ISO has 88 member states, who together represent 86% of world sugar production; 67% of sugar consumption; 92% of world exports of sugar; and 40% of world imports of sugar.2 Prior to Brexit, the UK was a member of the ISO through its membership of the EU and became an independent member of the ISO from 1 January 2021.
3.The International Sugar Agreement 1992 (ISA) sets out the following objectives for the ISO:
- To ensure enhanced international cooperation in connection with world sugar matters and related issues;
- to provide a forum for intergovernmental consultations on sugar and on ways to improve the global sugar economy;
- to facilitate trade by collecting and providing information on the global sugar market and other sweeteners; and
- to encourage increased demand for sugar, particularly for non-traditional uses.
Amendments to the Agreement
4.The Articles for Reform propose the following amendments to the Agreement:
- An expansion of the objectives to cover sweeteners and bioenergy and fuel ethanol production from sugar crops (Article 1);
- An extension of the scope in relation to reporting and information exchange to cover sugar products (Articles 32 and 33);
- An amendment of the provisions for appointing the Executive Director of the ISO (Article 23) to set a term limit of four years and to limit reappointment to two terms; and
- An amendment to the process for distributing votes among member countries, including for the adoption of the budget (Article 25). Each member’s share of the votes will be calculated by reference to their imports, exports, production, consumption of sugar and Ability to Pay Factor.3 Under the existing system, the voting distribution is calculated based on the share of a member’s exports to and imports from the global market.
5.The amendments regarding the expansion of the scope of the ISO are straightforward. In relation to the amendment of Article 23 on the appointment of the Executive Director, the Government does not provide a rationale for the proposed change in its Explanatory Memorandum (EM),4 but this would bring the ISO more into line with other international organisations, whose leaders usually have limited terms of office. For example, the Secretary-General of the United Nations can be appointed for a maximum of two five-year terms5 and the Secretary-General of the International Maritime Organization can be appointed for up to two four-year terms.6
6.The EM does not set out the reasons for the amendment to Article 25 regarding vote distribution, but DEFRA officials told us that the changes would allow the voting distribution to reflect the global sugar market more accurately. For example, the amendment would increase the voting shares of Brazil, India, Indonesia and the United Arab Emirates, which would better reflect the contributions that they make to global sugar production.
7.The Government states in the EM that it does not anticipate any change to the UK’s share of votes as a result of the proposed amendment to Article 25. Although the scope of the ISO is being expanded to cover sugar products, the EM explains that only the centrifugal sugar produced, consumed or traded by a member country will be used to calculate the vote distribution, meaning that, de facto, there will be no changes to UK vote share nor to the UK’s financial contribution.7
8.The EM states that UK membership of the ISO incurs an annual cost of approximately £48,000, which is relatively limited and is not expected to change over the next ten years. Attendance at meetings is also a minimal cost to the UK given that the headquarters are in London. In the event of a significant increase in membership contributions, the Government would receive this information well in advance of making the contribution and can decide to cease membership if it is no longer value for money.8
Entry into force, territorial scope and consultation
9.The amendments will enter into force from 31 October 2023 if they are accepted by at least two-thirds of members’ votes. If this threshold is not reached by 30 June 2023, the amendments will be withdrawn. If the amendments enter into force, any member country that has not accepted them will lose membership of the ISO, unless it is given an extension for accepting the amendments. The UK must give notification of acceptance of the proposed amendments by 30 June 2023.9
10.The Agreement applies to the United Kingdom of Great Britain and Northern Ireland and does not extend to the Crown Dependencies and Overseas Territories (CDOTs). The EM states that although this is a reserved matter, given the potential impacts on manufacturing and production, the Government consulted the devolved administrations, who confirmed that they had no concerns regarding the proposed amendments. The relevant draft text was also shared with the CDOTs and no concerns were raised.
11.The EM confirms that no new legislation is required to implement the amendments.
12.We report the International Sugar Agreement amendment proposal to the House for information.
1 HM Government, International Sugar Agreement 1992—Articles for Reform, March 2023: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1145602/MS_4.2023_International_Sugar_Agreement_Articles_for_Reform.pdf [accessed 24 April 2023]
2 International Sugar Organization, ‘Our Role’: https://www.isosugar.org/aboutus/role-of-the-international-sugar-organization [accessed 11 May 2023]
3 A member’s ‘Ability to pay’ is equivalent to its apportionment of the expenses of the United Nations. A state’s financial contributions to the United Nations is determined by a formula that takes into account each state’s gross national income and population.
4 Department for Environment, Food and Rural Affairs, Explanatory Memorandum on the International Sugar Agreement, 1992—Articles for Reform, CP 825 (24 March 2023): https://www.gov.uk/government/publications/international-sugar-agreement-1992-articles-for-reform-ms-no42023 [accessed 24 April 2023]
5 United Nations, ‘UN Secretariat Documentation’: https://research.un.org/en/docs/secretariat/sg [accessed 28 April 2023]
6 International Maritime Organisation, ‘Frequently Asked Questions: How is the International Maritime Organization structured?’ https://www.imo.org/en/About/Pages/FAQs.aspx [accessed 28 April 2023]
7 Centrifugal sugar is the industry term for refined, white sugar. It is produced by refining sugar beet or cane, which undergoes a process of filtering, boiling and crystallisation, after which the crystals are spun off in a centrifuge machine.
8 Department for Environment, Food and Rural Affairs, Explanatory Memorandum on the International Sugar Agreement, 1992—Articles for Reform, CP 825
9 Ibid.