RNM UPDATE 0415

September 30 , 2004

Prepared by the Communications Division of the Caribbean Regional Negotiating Machinery (CRNM), this electronic newsletter focuses on the RNM, trade negotiation issues within its mandate and related activities.

-  CARICOM CONSULTATION ON EU SUGAR REGIME REFORM

-  CARICOM STAKEHOLDERS CONSIDER BANANA REGIME

-  FTAA MARKET ACCESS TARGET DATE ELAPSES, CARICOM’S VIEW

-  RATIFICATION OF US-DOMINICAN REPUBLIC TRADE PACT IN JEOPARDY

-  CDB MUST BE CATALYST FOR NEW THINKING

-  NEWS BRIEFS

-  UPCOMING EVENTS

[La versión en espanol del Boletín MRN esta disponible en el sitio Wed de la MRN  (www.crnm.org)]

CARICOM CONSULTATION ON EU SUGAR REGIME REFORM

In July this year, the European Commission tabled proposals to overhaul the internal European Union (EU) sugar regime, which - if implemented - would have dire consequences for the sugar industry in the Caribbean.  When the subject was discussed by the Twenty Fifth Meeting of the Conference of Heads of Government of the Caribbean Community (CARICOM), in July 2004, the Heads characterized the proposals as a betrayal of the commitments and guarantees given by Europe at the time of the negotiation of the Protocol in 1975 (see RNM UPDATE 0412, August 19, 2004).  They also mandated that a ‘Meeting of CARICOM Stakeholders on the Proposals for the Reform of the EU Sugar Regime’ be convened to formulate an agreed response to the Commission’s proposals.  This meeting took place in Georgetown, Guyana, September 28 to 29.      

There is concern on CARICOM’s part, that the price reductions to sugar envisaged by the Commission’s reform and restructuring of the internal EU sugar regime would, if implemented, result in losses of tens of millions of dollars to the industry in the Caribbean, with serious negative effects on employment and living standards of workers directly employed or otherwise dependent on the industry.  It has been calculated that these cuts would amount to US$180 million in the first three years, with a recurring loss of $90 million annually thereafter.  A significant proportion of the cane grown in the region is produced by small farmers, and in some countries the industry employs between 20% to 25% of the population.

The stakeholder’s meeting was attended by Government Ministers and other Senior Officials, regional organizations including the Caribbean Regional Negotiating Machinery (RNM), industry representatives and representatives of cane farmers and sugar workers.  Participants provided overviews of the status of the regional sugar industry.  The meeting also received reports from industry representatives of their programmes and plans for restructuring, modernizing and diversification, especially in relation to exploiting the sugar-cane plant for energy and other uses and adding value by sugar refining.  The industry representatives emphasized, and the meeting concurred, that in order for these programmes to come to fruition, it was vital that the revenues from sugar exports be maintained at least at current levels. In addition, it was noted the industry had the right to benefit from any increased market access opportunities in Europe, whether occasioned by EU enlargement or any other factor.  For these and other reasons, having to do with the special legal status of the Sugar Protocol, and the undertaking in the Cotonou Partnership Agreement to preserve its benefits, the meeting agreed that the Commission’s proposals in their current form must be rejected.

Other presentations considered developments in the EU and the World Trade Organization (WTO) related to sugar and their implications for CARICOM sugar-producing countries, and CARICOM in general. 

It was agreed that mechanisms to enhance the competitiveness of the sugar industry must be secured by CARICOM, in collaboration with the EU.  There was also consensus on the urgency and importance of sensitizing stakeholders and the public - both within and outside the region - to the gravity of the threat posed by the EU’s proposals.

According to a press release issued at the conclusion of the meeting of CARICOM stakeholders, the meeting agreed on a common CARICOM position and an Action Plan encompassing the following principles:

*  Rejection of the EU’s proposals as they stand and initiating a policy of structured engagement with the EU and European Commission to insist on the special legal status of the Sugar Protocol and to safeguard its benefits.

*  Factoring the Region’s unified response into the formulation of a common Africa Caribbean Pacific (ACP) policy with regard to the proposed changes.  In this respect, the Region will be fully represented at an ACP Workshop to develop a response to the EC’s Communication on EU Sugar reform, to be held in Brussels, Belgium on 4-6 October 2004.

*  A programme for diplomatic lobbying and meetings with EU member states, the European Parliament, Non-Governmental Organisations (NGOs) and other stakeholders such as cane refiners and beet sugar producers. In this regard, CARICOM Ministers would be participating in a joint ACP lobbying mission to Belgium, Denmark, Poland, Portugal, Sweden and the United Kingdom on 10-14 October 2004.

*  Education and mobilisation of the Caribbean diaspora in the United Kingdom in support of the regional position.

CARICOM STAKEHOLDERS CONSIDER BANANA REGIME

The CARICOM Secretariat convened a meeting of stakeholders of the regional Banana Industry in Georgetown, Guyana, September 27.  Titled ‘Meeting of CARICOM Stakeholders on the EU’s Approach to the Introduction of a Tariff-Only Regime for Bananas’, the forum conducted an overview of the EU’s position/proposals on the banana regime, and the effects of a change to a tariff-only regime on the Caribbean’s banana industry.  Participants also considered CARICOM responses to the EU’s proposals, as regards a common position for a tariff as relates to market access opportunities under the existing regime.

A key element of CARICOM’s response developed by the meeting was the creation of a CARICOM Banana Advisory Team (CBAT).  Amongst its functions will be the provision of support to Prime Minister Gonsalves in the discharge of his responsibilities as Lead Head of Government of CARICOM with responsibility for bananas.  The First Meeting of CBAT took place on the morning of September 28, in Georgetown, Guyana (prior to the ‘Meeting of CARICOM Stakeholders on the Proposals for the Reform of the EU Sugar Regime’), and was guided by the document developed by stakeholders at the meeting on September 27, titled ‘Immediate Steps in Charting the Way Forward’.  The meeting identified a number of activities deemed necessary in advancing the objective of assisting CARICOM member states in securing the continuation of an adequate preferential regime in the EU, which will allow for the sale of Caribbean bananas on a viable and sustained basis.

CARICOM member states represented at the stakeholder’s meeting included Belize, Jamaica, Suriname, St. Lucia, and St. Vincent and the Grenadines.  In addition, there were representatives from the Caribbean Banana Exporters Association (CBEA); the Windward Islands Banana Development and Exporting Company Limited, (WIBDECO); CARICOM Secretariat; Organisation of Eastern Caribbean States (OECS) Secretariat; and the RNM, whose representative presented a paper titled: ‘Overview of the Situation Relating to the Introduction of a Tariff-Only Regime for Bananas’.

FTAA MARKET ACCESS TARGET DATE ELAPSES, CARICOM’S VIEW

At a standstill for several months now, the prospects of Free Trade Area of the Americas (FTAA) negotiations meeting the deadline of January 2005 became more unlikely today, September 30.  This date marked the deadline for conclusion of market access negotiations in the hemispheric trade pact talks.  Although not unexpected, that deadline expired with no conclusion to market access negotiations. 

Cognizant of the highly open structure of Caribbean economies and that international trade is large in relation to domestic production (as is reflected in a high trade/GDP ratio), CARICOM countries have a strong interest in market access negotiations in the FTAA arena.  Recent hurricanes have ravaged the region, and have severely affected primary export products (agriculture).  This demonstrated physical and economic vulnerability reinforces the significance of international trade to the sustained development of Caribbean economies, and underscores the need for market access arrangements that open up possibilities for trade in new goods and services.  

As the US Presidential election campaign moves into high gear, it is highly unlikely that the US Administration places priority on restarting the negotiations before the elections in November.   With just under four months remaining until the scheduled end of the negotiations in January 2005, it is clear that a Ministerial decision will have to be taken in the near future to set a new schedule for the conclusion of negotiations.  It has been reported, Deputy US Trade Representative, Peter Allgeier, recently disclosed that Brazilian Foreign Minister, Celso Amorim, and the United States Trade Representative (USTR), Robert Zoellick, are to meet soon to discuss a timeframe for FTAA negotiations.

In reference to stymied FTAA talks, US Agriculture Secretary, Ann Veneman, recently acknowledged that meeting the January 2005 deadline for concluding the trade pact was a challenge.  She affirmed, “this date is not carved in stone; it could be changed.”  Citing the lull in FTAA negotiations, on September 22, Allgeier reportedly said it would be a miracle to meet the 2005 target for concluding FTAA talks. 

In the context of the hemispheric trade pact under negotiation, Veneman maintained that “spillover” of new momentum was hoped for from a recent breakthrough in global trade talks, as a result of the package of framework agreements, clinched August 1, 2004.    She admitted, though, that it is not apparent how these recent multilateral developments have affected FTAA negotiations.  The US official made these remarks at a private sector forum in Washington, DC, September 23.  At the encounter, Brazilian Minister of Agriculture, Roberto Rodrigues, also offered insight on the prospects for progress in FTAA talks.

“Notwithstanding the impasse in the negotiations, the RNM is continuing with technical preparations in consultation with CARICOM member states to ensure that the region is prepared to re-engage in the process when the negotiations resume;” this according to the Director-General of the RNM, Ambassador Dr. Richard Bernal.

RATIFICATION OF US-DOMINICAN REPUBLIC TRADE PACT IN JEOPARDY

The US Administration’s plans for the ratification of a trade agreement entered into with the Dominican Republic, as part of the US-Central America Free Trade Agreement (CAFTA), involving Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua, have been suspended.  The announcement was reportedly made by US officials earlier this week.

The controversial inclusion several days ago of a twenty-five percent import tax on corn syrup as part of a larger fiscal reform package passed by the Dominican Republic legislature, was cited as justification for the US Administration’s decision.  Dominican Republic lawmakers argue that without the tax on corn syrup imports, the island’s sugar industry could ultimately be decimated.  US officials claim the move by Dominican Republic lawmakers violates the terms of the US-CAFTA, under consideration by US lawmakers. 

CDB MUST BE CATALYST FOR NEW THINKING

“In this period of accelerated globalization, global and regional circumstances have changed significantly; as such, as a vital institution for the region, the Caribbean Development Bank must be a catalyst on new thinking in the area of economic policy.”  Ambassador Bernal made this call during a keynote address which he delivered to a ‘Caribbean Development Bank Strategic Planning Retreat’, held in Barbados, September 27. 

Ambassador Bernal also underscored that the focus of the region’s process of adjustment to the rules it negotiates governing the trans-national commercial movement of factors of production, goods and services should be threefold.  Namely, it should be: i) comprehensive - involving all sectors, at present it remains uneven; ii) immediate - there is added urgency given the looming deadlines for trade negotiations the region is involved in; and, iii) proactive – according to Ambassador Bernal, the region is still reactive in its response to globalization, as regards restructuring key sectors.  While he highlighted the case of bananas, the RNM head went on to note the region now faces a similar crisis in the case of sugar and the recent developments in the WTO, in this regard.

Ambassador Bernal delivered his presentation at a panel entitled ‘Medium Term Development Strategies and Opportunities for Borrowing Member Countries’.  Panelists included: Professor C.Y. Thomas of the Institute of Development Studies, University of Guyana; Dr. Wesley Hughes, Director-General of the Planning Institute of Jamaica; Mr. Randolph Cato, Director, Economic Affairs Division of the Organisation of Eastern Caribbean States; and, Mr. Adalbert Tucker from Belize civil society.

NEWS BRIEFS

OECS Secretariat Report on Losses in Grenada due to Hurricane Ivan

The OECS Secretariat, which led a mission to undertake a Macro Assessment of the Social and Economic Direct and Indirect losses and secondary effects of Hurricane Ivan on the economy of Grenada, presented its findings in a 145 page report to the Grenadian Prime Minister and his cabinet colleagues in St Georges, Grenada, September 24.  The report undertakes a sector by sector analysis of the impact of Hurricane Ivan. An assessment of overall damages and their macro effects was computed in the short, medium and long term.  Sectors are grouped into four categories: Social (housing, health and education); Production (agriculture, manufacturing, wholesale and retail, tourism); Infrastructural (electricity, water and sewage, telecommunications, roads and drainage, coastal infrastructure, air and sea ports); and Environment (effects on watersheds, water quality and coastal resources). 

According to a press statement from the OECS Secretariat, the report makes recommendations and identifies projects to assist in meeting three major objectives: reinvigorating the economy, generating employment and reducing social vulnerabilities.  The report detailing the Macro Assessment of the Economic and Social impacts of Hurricane Ivan on the Grenadian economy has been sent to all of the major development partners operating in Europe, the USA and the Caribbean region. It will be presented by a delegation comprising officials from the Government of Grenada, the Director General of the OECS and Dr Esteban Perez of UN-ECLAC at a special meeting of the Donor Community convened by the World Bank on October 4, in an effort to secure the finances needed to rebuild the Grenadian economy and society.  The report is available at: http://www.oecs.org/assets/Grenada%20Report/GRENADAREPORT.pdf

CARICOM WTO Ministerial Spokesperson opens Regional Seminar

Hon. Clement J. Rohee, Minister of Foreign Trade and International Cooperation, Guyana and CARICOM WTO Ministerial Spokesperson opened a WTO/IDB-INTAL/CARICOM sponsored three-day ‘Regional Seminar on WTO Rules on Regional Trade Agreements’ in Georgetown, Guyana, September 28.  (The full text of Minister Rohee’s speech is available on the RNM website www.crnm.org).

Bernal Speaks at Miami Herald Conference

Ambassador Bernal delivered a presentation examining the CARICOM Single Market and Economy (CSME) process at the Seventh Annual Miami Herald Conference on the Americas, held in Coral Gables, Florida, September 30 to October 1.  In noting the CSME is a cornerstone of the region’s response to the challenges posed by globalization, Dr. Bernal underscored the importance of pressing ahead with its schedule of implementation. He expressed concern, though, that the recent hurricane damage in the region may set back the schedule for the CSME process.  Hon. Perry Christie, Prime Minister of The Bahamas, also attended the forum, delivering a presentation on US-Caribbean relations.

US Files Case in Global Trade Body over EU Customs Laws

On September 21, Ambassador Zoellick announced that the US had requested WTO consultations concerning aspects of EU customs laws and regulations.  A principal US grievance are differences in customs administration practices amongst EU member states’ customs authorities.  Because of the lack of uniformity in the EU customs regime, exports of US products to the EU are adversely affected; this according to a USTR statement. 

The European Commission said it regretted the US request for WTO consultations.  A Commission spokesperson lamented that the US did not move to raise the issue through bilateral mechanisms, and exhaust this avenue of interchange, rather than through the WTO in the first instance.  The spokesperson also held out hope that disagreement over the matter could be “satisfactorily resolved in consultations.”  Failing this, and if a decision is made in favour of litigation, the US could request the establishment of a WTO Panel.   On the merits of the US action, a statement issued by the Commission spokesperson questions the legal basis of the US complaint.

French Ag. Minister: EU to Appeal WTO Sugar Ruling

The WTO ‘Panel on EU Export Subsidies on Sugar’ issued its final report to the parties (the EU and Australia, Brazil and Thailand), September 8.  In a statement issued by the European Commission, earlier this month, a spokesman revealed that the Commission will “carefully study the panel report as well as its options in this dispute.”  The statement further indicated that a decision regarding an appeal of the panel report would be made in due course.  Speaking at a forum in Mauritius in mid-September, French Agriculture Minister, Herve Gaymard, reportedly said the EU would appeal the WTO ruling. 

Russia could join WTO by end of 2005

Following several endorsements from neighbouring countries, including the European Union and China, backing Russia’s bid to join the WTO, that countries’ Deputy Prime Minister, Alexander Zhukov, according to reports this week, said he believes Russia could join the WTO by the end of 2005.  In this regard, he cited his government’s view that WTO accession is a priority.

Brazil IPR Report submitted to US

A report documenting the actions Brazil has been developing to combat piracy was submitted to US officials, September 22.  The move by Brasília is seen as an effort to mitigate the United States imposing sanctions on Brazil over the issue of compliance with the Intellectual Property Protection Law.  US government and private sector interests will now study the document.

UPCOMING EVENTS

ACP Workshop

A workshop on an ACP response to the European Commission’s Communication on EU Sugar reform will be held in Brussels, October 4 to 6.  The RNM will be represented.

CTO/CRNM/OAS Workshops

A ‘CTO/CRNM/OAS Training workshop on Tourism and Trade Negotiation Issues’ will be held October 5 to 6 in Suriname and October 8 to 9 in Guyana, respectively.

Technical Working Group on EPA

A RNM Technical Working Group on Economic Partnership Agreement (EPA) is to be convened in Santo Domingo, Dominican Republic, October 11 to 12. The objective of the forum is to define the scope and priorities of CARIFORUM integration, as part of the region’s preparations for the integration phase of CARIFORUM-EU EPA negotiations.

For More Information Contact:

Nand C. Bardouille 

Communications Officer

Caribbean Regional Negotiating Machinery (RNM)
3rd Floor, The Mutual Building, Hastings Main Road, Hastings, Christ Church, Barbados
Tel: (246) 430-1678
FAX: (246) 228-9528
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