COMMENTARY

Strong Caribbean position needed in Hong Kong

by Sir Ronald Sanders, a former Caribbean diplomat, now corporate executive, who publishes widely on small states in the global community

Tuesday,  December 6, 2005

Guyana’s Minister of Foreign Trade, Clement Rohee, has an unenviable task during the Sixth Ministerial Meeting of the World Trade Organisation (WTO) in Hong Kong from December 13th to 18th.

Mr Rohee has been selected by the Chairman of the Conference as one of six “facilitators”, three of them having specific roles. In Mr Rohee’s case, he has been assigned “specific development related issues”. 

The Guyana Trade Minister played a similar role at the Fifth Ministerial Meeting in Cancun in 2003. The task was not easy then, and it is far harder now. 

The Cancun meeting collapsed when the yawning gulf between the positions of the developed countries, the EU, the US and Japan, and developing countries became blatantly clear over agricultural subsidies by the rich which, in significant part, deprived the poor of markets in which they might otherwise compete. 

But, some developed countries, such as Australia, were also unhappy at Cancun, and their vehement position bolstered the strong alliance between China, India, Brazil and South Africa that dictated the stance of the larger developing nations.

For the most part in Cancun, CARICOM countries stuck with their African and Pacific partners in ACP group. They recognised that without access to the EU market on preferential terms, they would be unable to compete with larger developing countries.

At Cancun, Mr Pascal Lamy, now Director-General of the WTO, was the lead negotiator for the European Union (EU), and his mandate then was to give up as little as possible on agricultural subsidies as he could, but to advance the opening of markets to services, competitive investment, and competition for contracts.

Now we come to Hong Kong where battle lines are drawn even deeper, except this time there are very few countries with which CARICOM countries can seek an alliance, except for the African and Pacific states in the ACP group. 

In the wake of the refusal at Cancun by the EU, and at that time the US, to budge on agricultural subsidies particularly for EU beet sugar and US cotton, several countries sought the intervention of the WTO. 

Arbitration panels found against the EU on beet sugar and against the US on cotton. 

The EU then seized the opportunity of having to reduce the subsidised price paid to European farmers, to cut down the price paid to ACP countries for their cane sugar.

African, Caribbean and Pacific (ACP) – are now seething over the EU decision to cut prices paid for their sugar by 36 percent in a phased basis starting in 2006. 

Mr Rohee’s country, Guyana, alone will lose US$37 million per year in revenues, and the sugar-exporting countries of CARICOM will collectively lose US$95 million. 

In addition, the EU has offered 18 of the ACP countries the derisory sum of forty million Euros as compensation for the second half of 2006, but there is no decision on how much will be on offer after that or for how long. 

So, the representatives of CARICOM countries will be attending the Hong Kong Ministerial meeting with blood in their eyes. And, not only over sugar. They also face the loss of significant revenues and employment from a new EU regime for the importation of bananas.

And while there are CARICOM countries, such as Antigua and Barbuda, which do not export sugar and bananas, their links to CARICOM banana producing countries especially, but to the others as well, will have a knock-on effect on their economies.

Mr Lamy’s successor at the EU, Peter Mandelson, has a mandate for the Hong Kong meeting that is very similar to the one Mr Lamy advanced in Cancun. Mr Mandelson has already said that the EU is not giving another inch on agriculture, and the discussion should turn to opening up market access, particularly in developing countries, for non-agricultural goods and services and to a reduction in industrial tariffs. Of course, the farming lobby in Europe – most of it extremely wealthy farmers, not small by any measure – is powerful.

That power explains two other things in large part: firstly, the reduction in the price paid by the EU for sugar from 39 per cent to 36 per cent; and secondly, the huge compensation that will be paid to EU beet sugar producers once the price cut is in place.

Unlike the miserly compensation being offered to the ACP group, the EU farmers can look forward to access to a fund of Euro 7.5 billion which would give them about 64.2 per cent of their present income.

Jamaica’s Trade Minister, K D Knight, has already announced his intention to “cold shoulder” the EU in Hong Kong. Mr Knight’s obvious anger is understandable for two good reasons. 

Firstly, his country had a contract with the EU over sugar. He could not have reasonably expected that the EU would overturn the contract without, at least, taking careful soundings from the governments of the ACP. 

Secondly, he has a duty of care to his own people. Just as the EU political directorate feel they should be responsive to their wealthy and powerful farming community, just so Minister Knight and other Ministers from the ACP have a responsibility to the small, poor and numerous agricultural workers in their countries. 

Recently, the Head of the European Commission’s Delegation to Barbados and the Eastern Caribbean, Mr Amos Ticani, is reported to have told a workshop at the University of the West Indies Cave Hill Campus, that the Caribbean has “unrealistic expectations” of Europe. Mr Ticani is also reported to have said that the region needs to sever its umbilical cord to Europe, and he described Caribbean reaction to the unilateral cut in the price paid for sugar as “a lot of fuming”. “The past”, he is reported to have said, “is the past. We want to look at the future”.

If Mr Ticani is correctly reported, he overlooks that in the past, European nations became wealthy and powerful on the resources of the Caribbean including sugar and that forced labour played no small part in the accumulation of that wealth and power.

He also ignores the fact that if CARICOM countries are “fuming”, it is because they had a right to expect a contract on sugar to be respected. If the Caribbean had abrogated a contract in the same way, they would have been made to pay a price.

The Caribbean could draw a line on the past in its relationship with Europe, and it could look to a future in which Europe is less important. That would be a sad development for both groups of countries. 

But, in drawing a line on the past and not relying on sentiment, conscience or compensation for broken promises, the region would be forced to use whatever little leverage it has to look after its own interests.

Part of that leverage is for CARICOM countries to drive a hard bargain in Hong Kong in close collaboration with their partners in the ACP group.

For, if the ACP countries are to achieve anything in Hong Kong for themselves, they will have to hold to a common position and resolve to stop any other matters being advanced until their own special circumstances are addressed. 

Crucial to those circumstances is not only far larger compensation for sugar than the EU has proposed, but also an agreed number of years over which it will be paid. 

(responses to: ronaldsanders29@hotmail.com) 

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