(i) One of the basic elements of the Commission paper is the need to reduce domestic overproduction by the EU; however, the measures proposed will result in severe injury to the ACPs and LDCs and in fact will benefit only industrial users of sugar in the EU. It is to be noted that, since the inception of the Sugar Protocol in 1975, the ACP have not increased the quantities of sugar exported to the EU under the Protocol, whereas the EU has increased its membership.
(ii) The Sugar Protocol is an intergovernmental agreement with obligations to be met by all contracting parties. On the EU side, the obligation is to respect the commitments enshrined in the Protocol in terms of the three guarantees of price (taking into account the relevant ACP economic factors), access and indefinite duration. Accordingly, the EU sugar regime should be appropriately structured to maintain the existing guarantees.
(iii) The severity of the price reductions and timeframe for their implementation, and the dismantling of the intervention mechanism, as proposed, are totally unacceptable since they are tantamount to firstly, a breach of the EU obligations enshrined in the Sugar Protocol, secondly, represent an impairment of benefits derived therefrom, and thirdly the negation of the multi-functional role of sugar with dire consequences for the ACP countries.
(iv) The ACP and the LDC regret that the proposal of the LDCs of 3 March 2004 has been ignored by the European Commission, and express their strong reservations on the Commission's proposals, which would negate the development intent of the EBA initiative.
(v) In an industry based on a perennial crop and which requires a predictable environment, the proposal of the Commission to have a two tier reform, one starting in 2005 and another one in 2008 is unacceptable and constitutes a element of uncertainty and instability which is not conducive to the investments necessary to promote and enhance competitiveness.
(vi) The ACP note the reaffirmation by the Commission of the commitment of the EU to buy annually at a guaranteed price an agreed quantity of 1.3 million tonnes white sugar equivalent, but emphasize that access without a remunerative price that will ensure at least the current level of earnings will be meaningless.
(vii) The ACP consider that by 2008 there would be greater clarity in the sugar environment arising from issues related to the WTO, notably the implementation of the Doha Round (noting that the 1995/2001 sugar regime was only agreed after the Uruguay Round Agreement), the implementation of recommendations of the WTO Panel/Appellate Body in the sugar case, and the accession of Bulgaria and Romania with the possibility of additional market access for ACP countries to an enlarged EU. Accordingly, the reform cannot start in July 2005, and must be delayed until 2008.
(viii) Adjustment programmes need funding in advance of any reduction in earnings brought about by proposed EU reform. In this regard, a Competitiveness Fund must be established as early as 2005.
(ix) The ACP note that the outermost regions of the EU will benefit from special treatment taking account of the specific constraints of their agriculture and industry, as well as their logistic situation in relation to the EU market. The ACP, which are in a similar situation, therefore should benefit from comparable treatment.
(x) The ACP further note that compensatory mechanisms as appropriate have been provided for in situations where operations are not economically viable. The ACP expect comparable treatment as appropriate.
(xi) The ACP re-affirm that all losses due to possible price reductions should be fully compensated for with an automatic and predictable mode of disbursement. The ACP highlight the requirement that fund disbursement must be simple, timely and recurrent. This is of critical importance in the implementation of any adjustment programme. Resources relating to the Competitiveness Fund and compensation for price reductions should be separate and distinct from each other and additional to EDF resources.
(xii) The ACP note the reference to Article 36(4) by the Commission. This Article commits the parties to the Cotonou Agreement to safeguard the benefits of the Sugar Protocol and to recognize the special legal status of the Sugar Protocol.
(xiii) The ACP welcome the intent to maintain an orderly managed market although they consider that the severity of the price cut proposal will render the market unremunerative. The ACP welcome the continued limitation on isoglucose and on access from the Western Balkans as well as the provisions for avoiding distortion of competition between the LDCs and the ACP.
(xiv) The ACP consider the above as essential requirements against which they would be prepared to discuss an implementation period of not less than 8 years and other issues related to the reform of the EU sugar regime.
(xv) The ACP look forward to an open and structured dialogue on the reform proposals and the preparation of a plan of action in favour of the ACP States concerned.
(xvi) The ACP further welcome the EU Council proposal for a meeting at Ministerial level with the ACP sugar supplying States.