Caribbean Sugar and Bananas: The EU Remains Engaged
Ambassador Amos Tincani, Head of EC Delegation in Barbados and the Eastern Caribbean
The reform of the EU banana and sugar regimes in 2005 was badly received in the Caribbean.
The EU has been accusing of breaching binding commitments with the group of Africa,
Caribbean and Pacific countries, enshrined in the banana and sugar protocols to the ACP/EU
Lome Conventions; of betraying a decades’ old development partnership with Caribbean
countries; of destroying vital traditional industries; of jeopardising the livelihoods of
thousands of Caribbean citizens; and even of undermining the social fabric and stability of
The fact of the matter is that the reforms were inevitable, that they had been coming for quite
some time and that the EU is (and will continue) providing very significant adjustment-related
assistance to Eastern Caribbean producers. Moreover, EU reforms, together with EU aid and
the Economic Partnership Agreement (EPA) being negotiated with the Caribbean Forum of
ACP states are indirectly supporting well established regional trends towards service
economies and away from the production of bulk commodities for export.
Last year witnessed the culmination of a process started in the late 1990s with challenges
brought at the WTO by Latin American producers against the EU banana regime, hitherto
based on a combination of tariffs and quota offering preferential access to ACP bananas. An
understanding reached in 2001 entailed the establishment of a tariff only regime for Most-
Favoured Nation (i.e., Latin American) bananas as of 1 January 2006. The impossibility of
agreeing on a negotiated level for the tariff resulted in two arbitrations at WTO rejecting
proposals submitted by the EU. In the light of the second arbitration, the EU decided to
establish a tariff of €176 per tonne of MFN bananas, together with a slightly increased duty
free ACP quota (to 775,000 tonnes, on account of the EU enlargement in 2004) managed in a
gradually more flexible manner until, by 2008, the EPA would ensure unlimited duty-free
access for Caribbean bananas to the EU market. In the meantime, the EU has been providing
substantial assistance to Caribbean banana producing countries aimed at supporting banana
commercialisation, agricultural and economic diversification and social protection to farmers.
To give an idea of the EU’s commitment to this process, the Windward Islands have been
allocated close to €400 million (some XCD1.2 billion or BBD900 million) of grant money
between 1994 and 2008. That makes them the highest recipients of EU aid worldwide on a per
capita basis, by far.
Changes to the EU sugar regime decided in 2005 are linked to the broader process of EU
Common Agricultural Policy (CAP) reform ongoing since 1992, the impossibility of
sustaining sugar prices three times the world market’s and, again, action at WTO by non-ACP
large sugar producers like Brazil. In that context the EU decided to cut guaranteed prices by
36% over four years starting in 2006. This will affect Caribbean sugar producers, who benefit
from those prices within set quotas via the ACP-EU Sugar Protocol, as well as EU ones. The
EU has allocated €40 million of transition assistance to ACP Sugar Protocol beneficiaries in
2006, to be followed by a package of support for the period 2007-2013 similar to the one
helping ACP banana producers. Caribbean sugar producers are thus to benefit from
substantial assistance to enhance the competitiveness of their industry where feasible, or
otherwise diversify, while at the same time strengthening social safety nets and addressing
other related needs (such as those related to the environment).
In the specific case of the Eastern Caribbean, the reality is that the Windward Islands are,
given their structural handicaps (small economies of scale, reliance on imported inputs,
mountainous terrain), higher cost producers than even other Caribbean countries with which
they are to compete. The future for these countries does not lie in bulk banana exports.
Same thing applies to Eastern Caribbean sugar producers: St. Kitts has already decided to stop
the production of sugar for export, while Barbados is striving towards alternative uses
(electricity production) and higher value sugar products. National Adaptation Strategies,
which will inform the disbursement of the abovementioned package over 2001-2013, are
being elaborated in both countries with EU support.
The European Union will continue supporting these countries’ efforts to adapt their banana
and sugar industries and their economies to the new international realities.