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ACP COUNTRIES IN THE AFTERMATH OF THE EU SUGAR REGIME REFORM

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ACP COUNTRIES IN THE AFTERMATH OF THE EU SUGAR REGIME REFORM Powered By Docstoc
					     THE AFTERMATH
           of
EU SUGAR REGIME REFORM

SUGAR PROTOCOL COUNTRIES
      PERSPECTIVE

         Hon. Dr. A. Boolell
              INTRODUCTION
My message will focus on the following:-
• Difficulties / challenges of the Sugar Protocol countries to
  adapt to the EU Sugar Regime Reform of 2006
• Inadequacy of the promised EU transitional support funds
• Mis-match between front loaded funds requirements ACP
  action plans and the delayed timeframe of disbursements
  2006 -13
• High risk of further impoverishment of the ACP Sugar Protocol
  countries UNLESS necessary accompanying measures are in
  place
• Sugar cluster re-engineering to competitive benchmarks and
• Urgency of harnessing supplementary support resources
    DAUNTING CHALLENGES
•   Serious adverse impacts on the Sugar
    Protocol ACP states due to EU Sugar Regime
    Reform in force since 1 July 2006
•   There has been critical rethinking of this sector
•   13 Action Plans already submitted
•   Mutually agreed sustainable development
    projects initiated. Expectation is that the
    remaining five countries join in
•   Daunting challenges for Sugar Protocol
    Countries to timely mobilise funds in their
    endeavour to reshape their sugar sector
The Paradigm shift in the
Game…
A new strategy to be defined for
ACP countries


 ISO membership is :- 50
 EU has about 25% votes
 The remaining 49 members
includes ACP Sugar protocol
countries with ONLY 6% votes
      Accompanying measures
It has been notified that the following funds out of the
     budget line would be available :-
•     Euro 40 millions ( 2006)
•    Euro 165 millions ( 2007)
•    Undefined ( 2008- 13)
•    The 15 % ceiling have to be reviewed as it favours
     those who are smaller suppliers compared to larger
     ones ( ideally should be proportionate to the revenue
     forgone)
•    There should be more flexibility and the funds should
     be project based
•    There is a need to identify new sources to supplement
     the EU funds
   Adaptation Strategy emanating
         from the reforms
• The multifunction strategy will be based on
  each country’s specific needs
• Mauritius approved Multi Annual
  Adaptation Strategy is available on the
  Website
• The strategy aims at making the sector
  less vulnerable to the reforms
                ACP Action Plans
•   The guaranteed price under the EU Sugar Protocol has been a
    predictable and stable source of revenue allowing ACP sugar industries
    to constantly up grade their operations and rationalise the sector to
    render it more efficient and competitive. The 36% price cut over the
    2006-2009 period equivalent to a cumulative shortfall of revenue of
    €1.77 billion by 2014/2015 at the end of the new Sugar Regime denies
    the ACP sugar industries of vital resources to adapt to the reform.
                        ACP action plans aim
•   at improving the competitiveness of the ACP Sugar Protocol Countries
•   maintain the vital multi-functional role of the sugar cluster
•   environmental protection and to produce more green energy and bio fuel
    from the cane biomass
•   earning carbon credits in line with the provisions of the Kyoto Protocol.
•   The sugar cane industry in ACP countries is a cluster of
    sugar, energy, molasses and rum production components in an
    integrated sector that forms an integral part of their social, environmental
    and economic fabric.
    SOCIAL AND RATIONALIZATION IMPERATIVES


•   A delicate balance must be struck between the social
    and rationalization imperatives.
•   The typical ACP sugar industry comprises a large
    number of small vulnerable farmers and is a source of
    livelihood to a large proportion of the rural workforce
    not only through direct employment but through a wide
    range of ancillary economic activities and small and
    medium sized enterprises dependant on the sugar
    cluster.
•   The ACP actions plans have, therefore, had to address
    the specific adaptation requirements of the small
    planters and the social costs
         Orientation of National Action Plans

•   Re-engineering, rationalizing and modernizing the
    milling sector as well as significantly increasing the
    production of energy and bio fuel through the cane
    biomass in an integrated cluster.
•   Flexibility must be the motto
•   The scarce EU adaptation resources will, therefore,
    have to be used to underwrite the significant social
    costs of the reform as well provide support to the
    heavier industry re-engineering costs and investments.
•   The energy and milling components of the action plans
    have been couched on the basis of business plans
    aimed at attracting supplementary financing resources
    required as well as attract FDIs.
          Transitional Support Required

•   Clear EU commitment of transitional support
    funds to the Sugar Protocol countries
•   ACP stakeholders to obtain the necessary
    bridging finance to fast track the
    implementation of their national sugar sector
    action plans.
•   Urgent setting up of a joint ACP-EU monitoring
    mechanism
•   reallocated in a timely manner within each year
    to allow those ACP countries on a faster
    implementation track to use these funds.
ASSESSMENT OF THE EU TRANSITIONAL SUPPORT


• Independent estimates carried out by reliable
  organisations have evaluated the ACP adjustment
  requirements at €250million to €500million per year
  whereas the European Parliament has supported a €200
  million adaptation envelope in favour of the ACP
  countries. In contrast, the EU has offered €38.8 million
  for 2006 indicated an envelope of €1.244 billion for the 7
  year 2007-2013 period.
• Package is not only inadequate BUT the delayed
  delivery of disbursement of the EU transitional support
  and the criteria imposed remain major impediments
  against a background where the ACP price has already
  been cut as from lst July 2006.
        NEED FOR SUPPLEMENTARY RESOURCES

      Supplementary resources are tapped to support the Sugar
      Protocol countries’ adaptation process which could be from :
•   The 9th EDF – use of uncommitted funds following the end of term
    of review in 2007 and the use of committed but unused funds a
    result of the roll-over review in 2010
•   The Energy Facility of €220 million earmarked for energy projects
•   €100 million of interest rate subsidy from the investment facility of
    the EIB on private sector loans in the context of the ACP action
    plans
•   €13 million envelope to finance ACP research projects
•   10th EDF envelope of €22.682 billion (covering 2008 – 2013)
    especially in relation to trade related assistance.
     CONCLUDING REMARKS
• These are difficult and challenging times for the ACP Sugar protocol
  countries
• sugar sector re-engineering imperative for its vital multi-functional
  role
• High world oil prices, rising freight costs to access distant markets,
  rising unemployment in our small economies resulting from trade
  liberalisation (e.g. end of the Multi Fibre Agreement) and the need to
  reshape the ACP economies towards new pillars of development.
                            What is at stake?
• The livelihood of millions who depend on the sugar sector in the
  Sugar Protocol countries and the sustainable development of the
  ACP economies
• 14 Sugar protocol countries who are also ISO members need
  concrete assistance from ISO
    CONCLUDING REMARKS (
           cont…)
• How can the EU/ACP Sugar Protocol
  countries be helped by ISO ?
• It falls within the mandate of ISO to assist
  these member countries in terms of
  technical and other relevant assistance

				
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posted:5/3/2010
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