The Week in Europe
By David Jessop

On December 11 Caribbean ministers will gather in Brussels for a week of
consultations with their colleagues in the ACP group. Although the agenda
for the meeting is diverse it will include discussion of the European
Commission's (EC) 'Everything but Arms' initiative. If not amended this
proposal threatens the survival of the sugar and rice industries in the
Caribbean, will cause further problems for bananas and new uncertainties for
rum.

In policy terms, 'Everything but Arms' is a welcome initiative. It offers
the world's poorest, the 48 Least and Less Developed Countries (LLDC) as
defined by the United Nations, duty and quota fee access to the EU market.
It provides all LLDC, whether they are in the ACP or not, the opportunity to
increase their present marginal trade penetration of the wealthy EU market.
It is an approach the US, Japan and other OECD nations should emulate.

But in practical terms the EU's LLDC initiative, as currently drawn, will
seriously damage the Caribbean. Realistically, no one expects the LLDC to
increase immediately their exports to Europe. But commodity producers in the
Caribbean, who understand the way markets work, expect within a year of any
new regulation to see the EU sugar and rice markets destabilised and prices
fall rapidly as first traders and then the LLDC seize advantage in what up
to now have been highly regulated regimes.

It is for these reasons, as well as the principles involved, that Caribbean
Governments continue to call on the EU to honour its recently concluded
Cotonou Treaty obligations to the ACP. It is why Caribbean ministers are
expected to argue in Brussels that Europe must recognise the impact that any
sudden decision will have on the viability of sensitive commodities (sugar,
rice and bananas) and on vulnerable ACP states. It is why they will press
for the necessary impact studies and adherence to the processes in the
Cotonou Convention if Europe is to open its market to the LLDC.

The December ACP Council meeting in Brussels will take place against an
unusually confused background. As the weeks have passed since the LLDC
initiative was first announced it has become apparent to the Commission and
member states alike that the original proposals while well meaning are
seriously flawed. As a result, perhaps as many as half of the key EU member
States have come to recognise the negative implications of the proposal on
their domestic sugar, rice and banana industries and their overseas
departments or regions as well as on the more developed ACP.

During the last week it has been possible to discern the beginnings of a
more practical way forward. As matters stand, Member States are presently
awaiting a revised proposal from the EC. Despite there being a Commission
approved draft regulation, senior officials have begun to better understand
its shortcomings and have been re-considering the detail. Moreover, it
appears that the Commission realises that the current proposal will not
receive the necessary qualified majority vote necessary for adoption by the
EU Council. As a result it now seems that a revised regulation will be
forthcoming. This is likely to include longer transition periods with
quantitative restrictions for sensitive products or as a possible
alternative, strong safeguard measures. Although there is not yet a
timetable, it seems that the amended Commission proposal could now be sent
to Member States together with the EC's impact studies on sugar and rice in
time for a delayed December 6 meeting of the EU Council's Committee of
Permanent representatives who are dealing with the subject.

But what still seems to be little understood in Brussels among EU member
states is that the impact studies they have commissioned on rice and sugar
are not what is envisaged in Declaration XXIII of the Cotonou Convention.
This makes very clear that separate studies are to be undertaken by both the
EC and ACP on the overall impact of any LLDC proposal on the ACP and that
these will be the subject of a report to the EU/ACP Ministerial Trade
Committee. Critically, any such report, the Declaration states, will be
examined by the EC Council 'on the basis of a proposal from the Commission
with a view to preserving the benefits of the ACP-EC Trade arrangements'.

The problem is that the proposed Ministerial Trade Committee does not yet
exist. But interestingly, it seems that there may be moves afoot led by one
member state that is strongly committed to see the proposal for the LLDC
implemented as rapidly as possible, to convene at the time of the December
ACP Council an informal EU/ACP Trade ministerial meeting.

Their objective it seems is to try to achieve an understanding on a way
forward. If this were to take place this will not be the Ministerial Trade
Committee envisaged under Declaration XXIII of the Cotonou Convention but an
attempt to try to work out a way forward that maintains progress on market
opening for the LLDC but finds ways to mitigate the impact on ACP commodity
producers.

This may be easier said than done. The Commission seems to have opened
Pandora's box, most especially when it comes to sugar.

In a recent letter to Guyana's Stabroek News, the EC Delegate to Guyana and
Suriname set out the EC's case. Much of the overall content can be taken
issue with, but most significantly, for the first time in public, a senior
representative of the EC has raised questions about the future of the sugar
protocol. The language chosen was careful, but in essence the letter
suggested that the sugar protocol, despite its legally binding nature, was
not sustainable in its present form. The Delegate noted that the EC will
stand by its commitments under the sugar protocol but in the light internal
and external pressures will, with the ACP,  'review it in the context of new
trading arrangements (negotiations on the regional economic partnership
arrangements) "in particular as regards its compatibility with WTO rules
with a view to safeguarding the benefits derived therefrom, bearing in mind
the special legal status of the sugar protocol". His remarks elicited a
suitably strongly worded riposte from the Sugar Association of the
Caribbean, but the letter makes public the EC's unilateral long-term intent.

There are signs that there may now be within the EC a period of reflection
with the possibility of transition or safeguard measures being added to a
redrafted LLDC regulation. But this is cold comfort to ACP producers of
sugar in particular. The EC has in effect begun the post 2002 Trade
negotiations on commodities. It is doing so on its own terms. The ACP must
hold the EU to the legal obligations contained in the Cotonou Treaty.

David Jessop is the Executive Director of the Caribbean Council for Europe
and can be contacted at [log in to unmask]
December1, 2000

Dr. Amanda Sives
Postdoctoral Research Fellow
Commonwealth Policy Studies Unit
Institute of Commonwealth Studies
28 Russell Square
London, WC1B 5DS

Tel: +44 0207-862-8865
Fax: +44 0207-862-8820
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