The Week in Europe
By David Jessop


On May 31st the Suva Convention will be signed in Fiji. Its overall
provisions on aid, civil society and development will last for 20 years
while its trade provisions prepare the ground for an end to the special
preferential relationship that has existed for over 30 years between Europe
and the 71 nations African, Caribbean and Pacific grouping (the ACP). 

The new agreement, the successor to the Lomé Convention, is intended to
change fundamentally the relationship between Europe and its 71 African
Caribbean and Pacific partners (the ACP). New dynamism will be brought into
the development relationship though the involvement of the private sector
and other social partners. As far as trade is concerned, the emphasis will
be on making the new relationship compatible gradually with the rules of the
World Trade Organisation (WTO). That is to say the new arrangement will
integrate the Caribbean into the world economy through the gradual
introduction after 2008 of something close to regional two-way free trade
with Europe. 

For most industries in the Caribbean and elsewhere in the ACP this means
that there will be a small breathing space. In this period they must begin
to prepare for the enormity of having to face rivalry in domestic and
international markets from highly competitive industries in Europe and
elsewhere.  

However, one vital regional industry, rum, the region's fourth largest
export earner, will not have this luxury. It, unlike all other ACP products,
had its market liberalised unilaterally by the EU and the US in 1997 as a
part of a transatlantic agreement on information technology. At that time
the EU and US agreed to liberalise their markets for all white spirits so
that by 2003 both markets would largely be open to all producers of rum.

At that time Caribbean rum producers in both the ACP Caribbean and the
French Departments d'outre mer (the DOM) pointed out that this was
potentially disastrous. If the two industries that had traditionally
supplied the EU market for over 400 years were not given special
transitional arrangements then it would be hard to adapt to meet the
competitive challenge.

Since then, much rum has flowed under the bridge. The EU was not prepared to
deal with one transitional ACP case outside of the negotiations for a
successor arrangement to Lomé IV. However, after intense lobbying and high
level political intervention, the ACP rum industry, which is almost wholly
located in the Caribbean, was able to secure in February of this year a rum
declaration in the new Suva Convention. This recognises the damage done to
the industry by the EU/US arrangement of 1997 and offers the industry in the
short to medium term support to enhance competitiveness and assistance to
move from low value sales of bulk rum to higher value branded products. 

The challenge now for ACP Caribbean rum producers will be to turn the words
agreed into a workable programme that can be quickly delivered. The industry
has initiated a dialogue with the European Commission and are hoping that it
will be possible within the remainder of the year to begin to develop the
programmes needed to ensure their survival.

 For the French DOM producers the battle continues. Their industry has a
special arrangement in it traditional market, France, which it is seeking to
retain in the face of hostility from multinational spirits producers.
Renewal of the European agreement that permits this is due in 2002 and the
DOM industry are hoping to achieve this within the framework of the special
arrangements that the EU has for 'remote parts of Europe', but this is far
from certain.  DOM rum in the Caribbean is largely produced on a basis
similar to that for French wines: thus the cane for molasses is grown on
estates surrounding small distilleries and this direct link to agriculture
enables concepts such as appellation and rigidly structured definitions to
be promoted. However, the ability of this regional French industry to
maintain its position is far from certain despite the significance of the
industry to the DOM.

The regional rum industry is the first among many traditional producers that
will have to adapt and fight to survive trade liberalisation. Recognising
this DOM and the ACP producers agreed in 1998 an accord, which brought the
old adversaries together. Despite the relationship being sometimes uneasy
the relationship has survived to become a model for the type of Caribbean
EU/ACP arrangement that other industries under threat in the region should
consider. 

Rum is an unusual industry. Those involved probably have more awareness of
politics, trade policy, the nature of global competition and the need to be
able to act quickly to achieve closely considered objectives than most other
industries in the region. This is why they have been able to survive up to
now.  But no one should mistake the challenge they now face. Both the DOM
and ACP Caribbean industry are unlikely to survive far into the future
unless their true significance is recognised. It is the first regional and
ACP industry to have to face the full force of trade liberalisation. If it
does not survive the process then it is highly probable that after 2008 the
region as a whole can hold out little if any hope for other industries being
able to transit to open competition. 

In particular the smaller producers in nations such as Guyana, Barbados,
Suriname, the Eastern Caribbean and Jamaica, together with their
counterparts in the DOM in Martinique and Guadeloupe, are most at risk.
While there are good arguments for rationalisation across the region through
joint ventures, production sharing, branding and marketing arrangements,
there is a real danger that the culture and diversity of Caribbean rum may
be lost. If the industry regionally is rationalised to the level that only
the biggest survives as suppliers of product marketed globally under generic
names, then rum might just as easily be sourced in China or India as the
Caribbean.

In other words rum is a representative of Caribbean sovereignty. The former
Prime Minister of Jamaica, the late Michael Manley, suggested that the
fortunes of the English speaking Caribbean might be traced through the
success or otherwise of the West Indies cricket. The same could be said of
rum. In a not dissimilar way, rum represents an element of Caribbean culture
under threat.  Its brands and at best its flavours are closely allied with
the country of production and their loss would remove something unique and a
part of the regions heritage. Worse still, unless the unique branded
products that are produced can be made viable in international markets then
the product rum becomes yet another soulless, industrial product and a trick
of marketing, lacking the origin or vibrancy of its country of origin.

Recent analysis for the ACP industry shows already that in the period since
1998 the EU market is being flooded by product from non-traditional sources
in Latin America, North Africa and even sources as obscure as Turkmenistan.

Thus the industry's traditional market in Europe has been damaged while it
has been fighting to ensure that some assistance is available from 2000
under either the new Suva Convention or other European arrangements for
producers in the DOM.

In other words rum is now the test case as to the EU's intentions towards
the Caribbean when its comes to transitional support in the face of market
liberalisation. While industries such as tourism and financial services may
represent the future they will be meaningless unless traditional industries
with value added possibilities do not receive support in a rapid and
flexible manner. There is agreement in the Suva convention on what needs to
be done with the ACP industry. The commitments made must be implemented
speedily if this vital industry is to survive.
 
David Jessop is the Executive Director of the Caribbean Council for Europe. 
March 10th, 2000 




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