The EU market
Mauritius is signatory to the Sugar Protocol since 1975 under which it is allocated a quota of 491,030 tonnes WSE. The Sugar Protocol, which is appended to the ACP-EU Cotonou Agreement, provides that ACP countries may export an agreed quantity of cane sugar, raw or white, to the EC for an indefinite period at an agreed price.
Mauritius also supplies sugar to the EU under the Special Preferential Sugar (SPS) Agreement since 1995 [subsequently replaced by the Complementary Quantity as from 1 July 2006 up to the 2008/09 marketing year for the supply of EU refiners’ raw sugar requirements].
These two agreements regulate sugar trade between African, Caribbean and Pacific (ACP) countries and the European Community (EC).
Practically all of Mauritius sugar production is exported to the EC, under the Sugar Protocol and the Complementary Quantity. Moreover, the bulk of the seventeen Mauritian special sugars is exported to the EC, with additional tonnages exported to the US and to world market destinations.
However in the context of the setting up of Economic Partnership Agreements (EPAs), designed to succeed to the existing trade arrangements between the ACP and the EC on 1st January 2008, the EU Commission made a proposal on the 4 April 2007 to integrate the Sugar Protocol in EPAs, thereby de facto dismantling the Protocol.
The Sugar Protocol was denounced officially by the EU Council on the 30th September 2007, giving the ACP the two years’ notice required, as provided in the agreement. The Sugar Protocol will continue till the 30th September 2009; it will then be replaced by regional quotas in the context of the EPAs.
In the mean time, with the signature of the EPA interim agreement, the Eastern and Southern Africa (ESA) region, to which Mauritius belongs, has been granted an additional tonnage of 75,000 tonnes of sugar for the period up to 30th September 2009. This additional quota is only available to countries that have initialed the interim agreement.
Decrease in Price
The EU Sugar Regime was reformed in 2005 and under the new regime, which will last from July 2006 to July 2015, the price obtained under the Sugar Protocol will undergo a 36% cut by 2009/2010 and will be staged as follows:
Year Cumulative Decrease in Price Price c.i.f. per tonne
Up to July 2006 0% €523.7 2006/2007 5.1% €496.8
2007/2008 5.1% €496.8
2008/2009 17.1% €434
2009/2010 36% €335.2
As the biggest quota holder under the Sugar Protocol (37%), Mauritius is one of the countries that will be most affected by the 36% price cut. Moreover, given that sugar accounts for some 17% of forex earnings and up to 4.5 % of GDP, Mauritius is expected to lose up to €895 million during the nine years of the implementation of the new Sugar Regime.
To mitigate the effects of the reform of the EU Sugar Regime, namely the drastic 36% price cut, the EU Council of Ministers has decided to grant accompanying measures to ACP countries affected by the reform in order to help them adjust their respective sugar industries. Mauritius launched in this context the 'Multi Annual Adaptation Strategy Action plan 2006-2015', aimed at ensuring the long-term viability and sustainability of the local sugar industry. Reforms costs, namely those relative to support to small and medium-sized planters and social packages under the Voluntary Retirement Schemes and the Blueprint, will be financed for the most by EU accompanying measures.
For the year 2006/2007, €40 million were granted to ACP Sugar Protocol quota holders as accompanying measures; the share for Mauritius amounted to only €6.5 million. This amount has been topped up by an amount of €4.5 million from de-committed fund from the 9th European Development Fund (EDF), taking the total to €11 million. It is also to be noted that the EU has decided to cap the amount of money to a maximum of 15% of the total accompanying measures available. For the years 2007/2011, the EU has committed a sum of 127.5 million Euros. This amount does not take into consideration additional sums from other EU funds which could potentially raise them to 301 million Euros for a period which can be extended to 2015.
Next to the EU market is the United States market. Mauritius exports some 12,000 to 15,000 tonnes per year under the US Tariff Rate Quota, which is opened to some forty countries. The minimum share of Mauritius under the US TRQ represents 1.2 per cent of the total US yearly import tonnage committed under the WTO.
In recent years, Mauritius has obtained market access in the SADC region and in India. Under the SADC Sugar Protocol, Mauritius can now export a minimum of 1,500 tonnes of sugar, while under the Comprehensive Economic Cooperation Partnership Agreement (CECPA), a Tariff Rate Quota of 15,000 tonnes of sugar can be exported to India.