Recent Developments

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The Fourth ACP/EU Lomé Convention, to which the Sugar Protocol was annexed, expired on 29th February 2000. In its place, on 23rd June 2000, a new Partnership Agreement between the 77 ACP countries and the 15 member states of the European Union was signed in Cotonou, Benin. The Sugar Protocol is now attached to the Cotonou Agreement.

The guiding principles of the new Partnership Agreement are the reduction and eventual eradication of poverty, and the gradual integration of the ACP countries into the global economy. Furthermore, the Partnership Agreement "is also a framework for new partnerships for trade and investment"

However, the Sugar Protocol has no expiry date - it is of indefinite duration and it would continue without the Conventions or Agreements to which it may be attached; the Sugar Protocol has a "legal life of its own".

The most important aspect of the special status of the Sugar Protocol is that it is a legal and moral commitment binding the parties without time limit. However, there are other aspects of the special status of the Sugar Protocol, for example, that the Protocol is an integral part of the EU sugar regime in a way which clearly distinguishes it from the other Lomé trade protocols, and also for example, that under the Uruguay Round Agreement in 1994, it was agreed that "current access must be maintained"; moreover, the Sugar Protocol is compatible with WTO rules.

The ACP/EU Sugar Protocol in the context of the new ACP/EU Partnership Agreement
Renewal of SPS
WTO rulings and European Commission reforms
European Commission proposal for EU sugar reform

The ACP/EU Sugar Protocol in the context of the new ACP/EU Partnership Agreement

On 23 June 2000 the new Partnership Agreement between the 77 ACP countries and the 15 member states of the European Union was signed in Cotonou. The guiding principles of the new Agreement are the reduction and eventual eradication of poverty, and the gradual integration of the ACP countries into the global economy. Furthermore, the Partnership Agreement "is also a framework for new partnerships for trade and investment"

Article 13 of Annex V of the Partnership Agreement now provides as follows:

"In accordance with Article 25 of the ACP-EEC Convention of Lomé signed on 28 February 1975 and with Protocol 3 annexed thereto [the ACP/EU Sugar Protocol], the Community has undertaken for an indefinite period … to purchase and import, at guaranteed prices, specific quantities of cane sugar, raw or white, which originates in the ACP States producing and exporting cane sugar and which those States have undertaken to deliver to it."

Thus the political and economic importance of these key elements of the Sugar Protocol have been reiterated in the new ACP/EU Partnership Agreement.

Renewal of SPS

The ACP seeks renewal of SPS after it expires on 30th June 2001 under the provisions of paragraph 7 of the SPS Agreement which states that 'Before 1 January 2001, the two parties to this agreement shall open discussions on its possible continuation', and on the grounds that:

the SPS agreement has enabled ACP industries to make substantial additional investments in efficiency, environmental protection and social improvements;
the monitoring system which the ACP has employed in fulfilment of paragraph 6 of the SPS agreement has ensured, and will continue to ensure, that the ACP have reliably, collectively, predictably and precisely supplied the quantities of SPS set out in the bilan in order to meet the constantly changing needs of the EU refiners;
on several occasions, the ACP has mobilized supplies at very short notice, sometimes based solely on the long-standing trust between the two parties, in order to accommodate the needs of the European Union;
the SPS framework provides for fair terms of trade between buyers and sellers.

WTO rulings and European Commission reforms
Agricultural trade (and therefore the ACP/EU sugar arrangements) was first submitted to the rules of the WTO in 1995. The WTO Agriculture Agreement mainly relates to three areas: market access, domestic support, and export competition. Although sugar did not form part of the negotiations, the Uruguay round emphasized the WTO's firm commitment to further liberalizing existing agriculture markets.

Following a case brought against the EU in February 2004 by Australia, Thailand and Brazil under the WTO regime, the WTO Dispute Settlement Panel ruled in September 2004 that the EU has been in breach of its WTO export subsidy limitations as it is exporting up to 1.6 million tonnes of sugar annually with subsidies, an amount equivalent to its ACP preferential imports, without counting them against its export subsidy limits. The EU appealed the decision on 13th January 2005.

Although those countries who brought the case stated that they did not want to adversely affect the ACP sugar regime, it is the ACP countries that stand to lose most as a result.

Partly, as a result of the WTO challenge and in line with the current trend towards global trade liberalisation, and following recent EU Common Agriculture Policy reforms, the European Commission presented a blueprint for reform of the EU sugar regime on 14th July 2004. This followed the presentation of a Communication on options for sugar reform in September 2003. The European Commission proposed, amongst other things, a reduction in EU sugar prices (by about a third) and the removal of the existing quota system. It further proposed that these reforms be implemented by 2008/2009.

The ACP countries oppose the proposed reforms for a number of reasons including: the reforms breach existing EU legal obligations under the Protocol; they will have a significant negative socio-economic impact on all ACP countries; the reform proposals do not provide for sufficient compensation for this loss (competitiveness fund, price reductions compensations, etc.); the reform proces is stipulated to start too soon; and the proposed implementation period is not sufficiently gradual.

On 24 January, the European Commission (EC) presented its "action plan" for mitigating the potential impacts of the European Union (EU) sugar reform to ministers for the ACP sugar exporting countries in a meeting held in Brussels. The EC's action plan consists of a set of trade and development measures aimed at assisting ACP countries through their adjustment process when the EU sugar reform enters into force.

European Commission proposal for EU sugar reform
See ACP reaction from 22 June 2005: Press release and Backgrounder