REPA Booklet - Stop Epa

will probably approve this, especially under the new rules the US and EC are proposing for agriculture in the
Doha round. Meanwhile, ACP countries (and India) will keep a guaranteed quota of sugar exports to the EU,
but at the lower price that would be paid to all Least Developed Countries. This transition will be implemented
in three stages from 2005 to 2008 – coincidently when the Cotonou waiver ends.
How have the ACP countries reacted?
The (Caribbean) Heads of Government of CARICOM have condemned the proposal as a betrayal of Lomé
and Cotonou. They project an annual loss to their economies from 2008 of US$91 million, which well exceeds
Europe’s aid commitments to the region, and predict widespread unemployment. International trade unions
have highlighted the difficulty ACP countries will have competing with the low wage, largely non-unionised
workforce of Brazil’s agribusinesses, and the devastating effect of further restructuring and redundancies,
especially in Mauritius where 30,000 workers and 25,000 small farmers depend on the sugar industry.
“Recent studies
suggest that under any
likely scenario for
sugar reform, the
Jamaican sugar
industry will simply
disappear, with the loss
of 32,000 jobs.”
(EPA Shadow Newsletter
no.1, 2004)
What does this mean for Fiji?
Sugar is almost one quarter of Fiji’s total exports; two thirds of that usually goes to Europe. The industry is Fiji’s
largest employer. It is now undergoing a major and overdue restructuring, but it cannot absorb a sudden
massive drop in price. To survive, it will need much more time and a lot of transitional funding. The future options
are still not clear. Some in the industry think there is a future in value added production. Some in the Fiji
government would like to see support also directed towards creating alternative livelihoods. The Fiji Sugar
Workers Union and the National Farmers Union say there must be greater efficiency and better management
of the Fiji Sugar Corporation and effective assistance to displaced farmers. Everyone agrees that a total
collapse of the sugar industry would seriously destabilise Fiji. But this is a highly political issue. As leases to
Indo-Fijian farmers expire, and are not renewed by indigenous landowners who are not committed to sugar
cane production, many sugar farmers and workers are joining the ranks of Fiji’s urban unemployed - at the
same time as cutbacks in the garment sector are reducing jobs for mainly women workers in the towns.
Is the European Commission offering compensation?
Given the huge profits made by European companies for more than a century, you might expect the European
Union to provide substantial compensation. But Europe has no burning sense of obligation. Talks on compensation
are underway and the Commission has agreed that it won’t come out of the European Development Fund, as
originally feared. But no allocation is being made in the Commission’s 2005 budget. If it is included in 2006, it will
take some 18 months to set up the management fund and not reach the affected governments until the end of
2007, well after the adverse effects are felt.
Does sugar have to be part of a Pacific Economic Partnership Agreement?
That will be Fiji’s decision. It is too early to make that call, because the compensation negotiations have just
begun and the WTO appeal won’t be decided until at least mid-2005. There are examples where sugar has
been excluded from free trade agreements – for example, the European Union’s agreements with South Africa
and Mercosur and the recent Australia US Free Trade Agreement. But sugar makes up a much larger part of
Pacific ACP exports to Europe. If it is excluded it will be very difficult to meet the GATT Article XXIV requirement
that an agreement on trade in goods covers ‘substantially all trade’ and that would leave very little room to
protect other sensitive products from other Islands. If sugar was included, Fiji could seek a long transition time,
backloaded so any major concessions come near the end. Once it lost its protection the industry would need to
be competitive enough by then to survive in the global marketplace.
Are there other options?
One possibility is not to have any Pacific regional agreement on goods. Fiji could renegotiate the Sugar
Protocol as a separate issue. Alternatively, Fiji and possibly PNG could negotiate individual Economic Partnership
Agreements that included goods. The structure of subsidiary agreements would allow this flexibility.
Would the Commission agree to an Economic Partnership Agreement with just a couple of Islands?
The Commission sees sugar as a Fiji issue, but one that offsets the entire Pacific negotiations. It is still deciding
how to tackle the question. However, it will be reluctant to endorse anything less than a regional Economic
Partnership Agreement, because that creates a precedent that other ACP regions might follow.
A People’s Guide To The Pacific’s Economic Partnership Agreement 59