A time to speak in one voice against WTO trade distortions

Up close and personal ... delegates to the ACP Sugar Ministers meeting visit a cane farm at Legalega, Nadi, yesterday

Thursday, May 03, 2007

To all of you a cordial welcome to our warm and balmy shores of the South Pacific.

I sincerely hope that in the midst of these serious deliberations, you will find time to get a real taste of our hospitality Fiji-style and get to know our nation a little better before you depart.

And on that warm note of welcome, let us now turn our attention to the more weighty business that we are engaged in here as ACP Sugar Ministers and negotiators.

Most of us are bound together by a common historical heritage that has its roots in colonialism and sugar cane cultivation.

We have more or less trodden a common path in our evolution towards nationhood and are today beset by developmental problems and concerns that strike a similar chord.

Ladies and gentlemen, in the emerging delineation between rich and poor nations, or in today's vogue lingo, in the divide between the North and the South, we are together bound by a collective position, if not heritage.

Our common effort to strive for peace, progress and prosperity faced with our limited resources and vulnerable economies have brought us once again to the negotiating table with our better endowed and developed partner, the European Union.

A former American President, Franklin Roosevelt, used to maintain that:

"The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little."

There is no doubt the ACP group has too little, in terms of resources and expertise.

We are subjected to all manner of external pressures and constraints as we endeavour to emulate the social and economic success of developed nations.

Our struggle to maintain, and improve on, the benefits of the Sugar Protocol is an integral part of the continuing effort to ensure that the developed nations do not ignore their humanitarian responsibilities to those of us less developed. As sugar states of the ACP, we face the onerous task of ensuring that we can safeguard, under the EPA arrangement, the benefits hitherto derived from the Sugar Protocol.

The EU decision to cut the price of sugar by a hefty 36 per cent in just three years, has delivered a devastating blow to the ACP sugar supplying states.

But, the process has begun with a 5 per cent price reduction this year.

For those of us, heavily dependent on sugar as a major income earner, this poses a severe threat to our economic survival and well-being.

Apart from trade benefits, the ACP-EU Sugar Protocol brought real tangible benefits in improving the quality of life of our sugar farmers and others dependent on sugar production for their livelihood.

In Fiji, this is almost a third of the active working population. The closure or scaling down of the sugar industry, therefore, will have serious social and economic consequences for us. The impact on our rural society will be equally catastrophic.

Poverty is a major challenge to most, if not all of us, in the ACP Group. With restricted prospects for alternative employment, our only hope in containing poverty is development of the rural economy and creation of jobs there.

Sugar plays a key role in this regard.

We should not forget that the Cotonou Agreement and its predecessor, the Lome Convention were governed by the objective to "... promote and expedite the economic, cultural and social development of the ACP states "

With the central objective of "reducing and eradicating poverty and the gradual integration of the ACP states into the world economy."

In my view, these fundamental objectives of the ACP-EU agreement cannot be achieved if the benefits accruing to us under the Sugar Protocol are eroded too quickly under the liberalisation process. We need adequate time to adapt and adjust to the pressures being exerted by the WTO towards a complete dismantling of trade distortions. As I have said before, we are extremely vulnerable to external shocks and pressures.

Fiji, for instance, is trying to sustain itself against two major external shocks:

First, the 5 per cent cut in the EU price for our sugar;

Second, the severe impact of rising oil prices. Fiji's import bill for fuel is up by $200 million annually too much for a small island economy like ours to sustain.

Given these constraints, the 5 per cent cut imposed by the EU this year is simply too excessive.

Likewise, a 36 per cent reduction over a span of just three years, is drastic

Fiji maintains that the EU must reconsider the level of price cuts it is imposing and extend the timeframe to one that is more realistic and humanitarian in scope.

To understand the ACP position, it is important to put our development into its proper historical perspectives.

Our cane farmers suffered severe social and economic dislocation when they were uprooted from their traditional societies and cultures and forced to provide menial labour in alien lands.

Thousands of our people of Indian and African origin were carted to islands in the Caribbean, to Surinam, Trinidad, Guyana, Mauritius, South Africa and among others, Fiji, as labourers to serve the mercantile interests of imperialist nations.

They experienced gross exploitation. But, the dislocation brought in its wake associated political and social problems for our countries with which we are still striving to cope.

For us in Fiji, as no doubt elsewhere, the process of assimilation and integration has been very painful. And continues to be so.

Add to this tragic picture, the yoke of economic domination deliberately designed to exploit and keep our cane farmers in a form of permanent bondage.

I refer to the paternalistic nature of the system set up in Fiji by the Colonial Sugar Refining Company (CSR) of Australia which succeeded the traumatic Indenture era for our farmers.

For decades under the CSR our farmers suffered gross injustices, repression and social deprivation.

It was not until the arbitration award by Lord Denning in 1970, that a more equitable and fair system was introduced, which allowed cane farmers in Fiji to attain a degree of independence, stability and prosperity.

This was, of course, enhanced soon after by the benefits of the Sugar Protocol accompanying the Lome Convention of 1975.

Yet, despite these handicaps, this fledgling industry is suddenly being asked to compete at the same level as major producers such as Australia and Brazil who have vast resources at their disposal.

The Australian industry, for instance, owes its levels of efficiency largely to the huge State subsidies available to its growers over a prolonged period.

Such subsidies are continuing to this day, albeit, in different forms.

I think it is grossly unfair to expect Fiji, and other similarly placed ACP States to compete with such developed nations. There is no level playing field, yet, we are subjected to expectations, as if there were.

We in the ACP cannot be driven by the globalisation agenda of the World Trade Organisation.

Let not the big players dictate to us, and impose on us an agenda that is designed largely to promote their own vested interests.

I ask: Why is there such a rush to comply with the WTO when it has still not reached any agreement on the Doha Development Agenda?

Injustices inherent in this process must not be allowed.

While poverty worsens in our countries as we struggle to comply with WTO demands, the big players are aggressively pushing to protect their own farmers and national interests.

The US is fighting for its cotton industry, Japan for its rice farmers and a number of countries in the EU are pulling in different directions in pursuit of their own national interests.

All this is rendering an agreement on agriculture difficult, if not well nigh impossible.

Fiji's stand is clear: Let the WTO dismantle trade distortions completely and comprehensively before requiring the poorer nations to comply.

This will give us the time we need to adjust to the situation, and to usher in reforms.

In the meanwhile, the ACP must ensure that its voice is not swamped at the WTO level.

Agriculture is the very basis of our economy and we must lobby vigorously to protect our interests in the WTO agricultural regime.

We need at least another 10 years or so before preferential market access is dismantled to allow for a more level playing field to be established.

Meanwhile, there are serious problems to address at home.

Fiji's sugar industry has been subjected to some major setbacks which left it even more vulnerable to external shocks such as the reduction of the EU protocol price.

Hundreds of our cane farmers, and their families, were dislocated in the recent past following the non-renewal of their agricultural leases.

Might I add, the land problem we face in Fiji is yet another tragic legacy of our colonial past with which we are still struggling to come to grips as a nation.

This dislocation has had a devastating impact on cane production with yields falling from an average four million tonnes a year to less than three million tonnes.

All this lost production has to be recovered, and cane acreage increased before we even begin to cope with problems brought on by external factors.

Nevertheless, Fiji has undertaken an ambitious $US120million program to restructure and reform its sugar industry, and to diversify.

Our cogeneration project from bagasse will soon be online and we are seriously studying the feasibility of producing ethanol.

All this is in addition to the reforms directed under the EU's Accompanying Measures Programme (the AMP).

So, Fiji is doing its best to move towards greater value-added.

All in all, we have an exciting future ahead for our sugar industry. But, we fear these efforts will be seriously jeopardised, should price cuts be implemented too fast.

I re-iterate three years is too short a time.

What we would like to see is a more gradual implementation of the price cuts as the benefits of reform come on line.

They will not be significantly realised in the short span of three years arbitrarily determined by the EU. We, therefore, call on the EU to seriously consider revising the timeframe in which price reductions are to be phased out.

The new sugar regime under the EPA must move away from a standard prescription for all ACP countries.

Consideration should be given, within reason, to the difficulties facing each of the ACP states in so far as factors of production and market access are concerned.

Fiji appreciates the substantial developmental assistance the EU has provided in the form of the Sugar Protocol.

We are grateful for the support provided under the Accompanying Measures Programme (AMP) to partially offset the negative impact of the drastic price reduction.

We trust a similar spirit of generosity and understanding will continue to guide EU's relations with the ACP sugar group in the round of negotiations.

For our part, I am hopeful this conference will come up with strategies to ensure there is no real erosion of benefits under the new EC sugar regime.

There can be no compromise. It is essential the ACP maintains its unity and solidarity, if it is to negotiate successfully.

This is the challenge facing us this week and in the future, and I am sure we will rise to it should we fail the social and economic consequences to our countries will be too bleak to contemplate!

The responsibility is enormous but I hope it will not have dampened your appetite for the feast we have prepared for you this evening. I wish you all a very enjoyable evening. Bon appetit and vinaka vakalevu.

Dinner address by Mahendra Chaudhry, Minister of Finance, Sugar Industry and National Planning to the 10th ACP Ministerial Conference, Sheraton Fiji Resort, Denarau, Nadi

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