Brexit the Opportunity
Brexit is an opportunity for the UK government to create real preferential access for sugar industries in ACP and LDC countries that could once again become the engine for development within their national economies and the nations that depend on them. The reform of the European sugar regime from 1st October 2017 has fundamentally affected the value and volume of the trade in sugar from ACP and LDC countries, a trade that remains the backbone of many sugar industries and national economies in some of the poorest countries in the world.
“ACP Sugar" is an organisation representing 19 sugar industries in African, Caribbean and Pacific (ACP) and Least Developed Countries (LDC) and is calling out to the UK Government for:
1. The continued preferential access to the UK market for ACP and LDC origin raw and refined sugars on a duty-free basis
2. The creation of the value of preferential access by the establishment and maintenance of market value via various measures. These measures would need to include, but not be limited to, the retention of a tariff on non-preferential raw and refined sugar at the current EU levels,
3. The recognition of sugar as a “Sensitive Product” requiring “Special and Differential Treatment”, in the establishment of trade policy and in all negotiations and agreements with third countries, most particularly those with the European Union.
4. That the ACP and LDC suppliers be consulted fully during the formulation and establishment of UK trade policies in relation to sugar
ACP Sugar note that in March 2019, the UK government announced a Temporary Tariff Schedule to be implemented in the event that the UK leaves the EU without a deal. This schedule was revised in October 2019. There are positive elements for ACP/LDC sugar industries reflected therein and it meets some of the policy needs of our group. Many of our countries have now signed continuity agreements and thus will benefit from a zero tariff. A tariff of €150 per metric ton (although significantly lower than the prevailing MFN tariff in the EU) is imposed on other origins.
However, the preference and enhanced value that is intended for ACP/LDC origins will likely not be realised because the tariff schedule also provides for the opening of an “erga omnes” Autonomous Tariff Quota (ATQ) quota of 260,000mt, which will inevitably be utilised first by the UK’s sole refiner of raw sugar, leaving ACP suppliers to fulfil any remaining demand. The ATQ, as currently structured, will have the effect of reducing the price to the supplier for bulk raw cane sugar to the price of the residual world market. Whilst accepting that it can be an important tool in managing supply, if implemented without the proper safeguards and without adequate market information, this quota will destroy value in the market and the preferences intended to be for developing countries will, in effect, become a subsidy for the refiner.
Therefore, in order to ensure preference for ACP and LDC countries’ sugar and hence to promote the vital role of trade in reducing poverty, the management of the proposed ATQ should be as follows:
a. The ATQ is established on the basis of market requirements and on the back of sound and verifiable market statistics.
b. The refiner could only apply for licences to import under the ATQ in quarterly tranches during the second six months of each marketing year allowing ACP sugar suppliers preferential access.
Britain is preparing to leave the EU. This presents HM Government with an opportunity to support its goals for international development and to promote global trade as the most important driver of economic growth for ACP and LDC countries. The UK government should heed the plight of the ACP and LDC cane sugar producing countries and acknowledge the developmental benefits their industries provide by structuring a new trading system which supports them with a sustainable price for their sugar.
This isn’t about the UK giving a subsidy to developing nation sugar producers. It is about giving recognition to the role that sugar plays in their national economies and helping them to stand tall in today’s global economy by offering preference to a world market that is distorted by subsidies in the largest producers/exporters. This would not only acknowledge the development benefits of sugar but would also help create a fairer and more level playing field at a time when the market for ACP Sugar in EU 27 has been substantially eroded by the reform and production supported through Voluntary Coupled Support payments in 11 Member States.