This Week in Europe, 29 September 2000
Executive Director of the Caribbean Council for Europe
For those whose future depends on traditional agriculture, events in Europe in the last few weeks do not augur well.
On September 20, it became clear that the European Commission (EC) was trying to move forward to resolve its dispute with the US and Latin producers over bananas. Then officials made clear that the EC intends to carry out its earlier announced proposal to adopt a first-come first-served tariff quota regime for bananas. It has been working on the detail during the summer months, trying to resolve reservations about the way the scheme will be administered. As a result it expects to be in a position to make an announcement on October 4 and present its proposals to European Foreign Ministers for approval on October 9 with the objective of ending the long running dispute with the US before the year’s end.
This time around, EC officials are optimistic that they might be able to make progress on the basis that their regime being put forward is largely based on US thinking. Broadly speaking this would establish a transitional tariff quota system issuing licences related to the origin of the fruit, but on a first-come first-served basis. In or around 2006, this will be replaced by a tariff-only system. That is to say one that will, in time, result in the industry’s demise in some parts of the Caribbean as it is, in part, likely to discriminate in favour of lower cost ACP banana producers.
On the same day, the European Commission also took a decision to allow the world’s less developed countries (LDC’s) to have, for almost all products, the same access to the European Union (EU) Market as the 71 member ACP group of nations presently enjoy. In practical terms this means that as soon as the EU agrees, almost all of the world’s 48 poorest nations will have duty and tariff free access for almost all of their products. Only in the case of sugar, bananas and rice has the EC proposed to phase in the arrangement in three tranches probably between 2005 and 2008. The decision to provide LDCs with the same level of access to the European Union (EU) market comes as no surprise. But it is likely to create fresh uncertainties. As yet no one within the EC is willing to provide any detail as EU members states are likely to be as divided over aspects of this proposal as they are over that for bananas.
Although the initiative was announced with a fanfare on the day the College of Commissioners met in Brussels, the actual Communication (policy paper) remains under wraps. The official line is that the proposal has not been finalised and is still being discussed. It will not become a public document until it has been agreed by EU Member States ministers meeting in Council and this is not expected to happen for around two months. Alarmingly there will be no input into the decision by European Parliamentarians as it will not be either a co-decision with or the subject of consultation with the European Parliament. It also seems that until the inter-EU process is virtually completed, the EC will not instigate any discussion with the ACP. This is despite the fact that there is a specific declaration in the new Cortuno Convention that recognises that this is necessary because of the potential impact of any such decision on market access for LDCs on ACP producers.
The reason for this is that many member states have serious reservations about opening up the EU market to products such as bananas, sugar rice and rum. These are already sensitive, are subject to review or dispute settlements procedure at the World Trade Organisation (WTO) or which they produce themselves.
At the same time a new front is opening up in relation to the EU’s sugar regime to which the ACP/EU sugar protocol is intimately linked. On September 26, EU ministers objected to proposals put forward by the EC’s Agriculture Commissioner to rethink the reform of sugar subsidies provided to European farmers under the EU’s Common Agricultural Policy. They did so on the basis that the proposals left virtually untouched the existing European regime. As a result, at least half of the EC’s 20 Commissioners objected and called for radical reform of what is widely seen as one of the least market-oriented European agricultural regimes.
Although the Agriculture Commissioner’s response is likely to be cautious many of his colleagues are said to favour fundamental reform in two years time to a regime that costs Europe Euro 2 billion per annum or five per cent of its total agricultural budget. There is a very real feeling in Brussels that European Commissioners now want to see radical reform of a regime which has a direct bearing on the price paid for ACP sugar entering Europe under the sugar protocol contained first in the Lomé and now in the Cortuno Convention.
Just as alarming are proposals now being considered for a new EU rice regime. These changes will have the effect of altering tariffs for ACP rice entering the EU and will change over time the structure of the European rice market. Of as much concern to ACP rice producers may also be the new arrangements being considered for trade through the EU’s Overseas Territories (the OCT), a route used by Guyana and Suriname.
In other words, in the space of the last six weeks it has become apparent that while the access granted under the Cortuno convention continues up to 2008, the value of such access is being rapidly eroded by changes in the EU’s own regimes and the need to adjust to the reality of WTO rules and international pressures.
Does all of this spell the beginning of the end for traditional agriculture in much of the Caribbean? Will there be nations in which sugar, bananas or rice can survive by increasing efficiency and reducing production costs? Are their niches based on for instance, organic production that can be created? The answers are far from clear in a world in which many other nations can produce the same crops on a vastly larger scale using cheaper inputs and labour.
No one should underestimate the remaining importance of traditional agriculture to the Caribbean and certain economies in particular. Nor should they ignore the capacity of sudden unemployment to destabilise whole nations if the economic transition out of once preferential arrangements is too rapid. But there is a need for realism about the future. In absolute numbers the percentage of the population employed in agriculture is likely to remain high in Guyana, Jamaica, Cuba, Haiti and the Dominican Republic. But elsewhere this is not so.
Traditional agriculture now contributes just eight per cent of the Caribbean’s overall Gross Domestic Product. Statistics show that very many Caribbean nations, including some of those widely considered to be dependent on traditional agriculture, have already made the transition to the new service-based economy of tourism financial services and information based industries. So much so that services now account for as much as 71 per cent of the region’s whole Gross Domestic Product.
In other words much of the region has already undergone a sea change. Despite this, for reasons of solidarity and for political, commercial and even nostalgic reasons the belief remains that agriculture is and must remain the mainstay of the region. Recent developments in Brussels suggest efficient agriculture and long transition periods have to be fought for, but statistics suggest this should be in the context of a new Caribbean economy.