Sugar AgreementsThis area of the site includes a brief summary of all the sugar agreements under which GuySuCo trades. It is our hope to convey to you, the significance of these agreements and their impact upon not only Guyana's sugar industry but our livelihood as a nation.
The following information is cited from the ACP Sugar web site found at www.acpsugar.org.
ACP/EU Sugar Protocol
Born out of the mutual interests of the European refiners seeking a reliable and predictable supply of sugar from their Commonwealth and the African, Caribbean and Pacific (ACP) countries desire to enjoy guaranteed sugar prices as well as maintain an industry that is inextricably linked to their countries housing, healthcare, education, recreation, and other sectors reliant on sugar production, the ACP/EU Sugar Protocol was formed and took effect on 28th February 1975. This agreement holds a huge significance to Guyana in that it comprises 70% of our total export sales.
The Sugar Protocol (SP) is a government- to-government agreement covering individual quantities of cane sugar for each ACP party to it. Its three fundamental principles are agreed quantities, guaranteed prices and indefinite duration. It states that, the European Community undertakes for an indefinite period to purchase and import, at guaranteed prices, specific quantities of cane sugar, raw or white, which originate in the ACP states and which these States undertake to deliver to it. (Article 1 of the ACP/EU Sugar Protocol.)
Guyanas agreed quantity is 159,410 tonnes white sugar equivalent or 167,000 metric tonnes per year. These quantities may not be reduced without the consent of the individual states concerned. (Article 3(2) of the ACP/EU Sugar Protocol.) Guaranteed Prices for the ACP white or raw sugar apply to bulk sugar cost insurance and freight paid (CIF) to European ports delivered under the Sugar Protocol. ACP guaranteed prices are negotiated annually between the EU and the ACP states signatory to the Sugar Protocol, within the price range obtaining in the Community, taking into account all relevant economic factors.
The legal position pertaining to the indefinite life of the Sugar Protocol is that it stands on its own feet-it is not lawfully dependent on the existence of the Lome Convention now known as the Cotonou Agreement. The Protocol provides that in the event of the convention ceasing to be operative, the sugar supplying states shall adopt the appropriate institutional provisions to ensure the continued application of the provisions of this Protocol. (Article 8(2) of the ACP/EU Sugar Protocol.)
Special Preferential Sugar, SPS
At the time of the accession of Portugal and Spain to the EU in 1986, the ACP formulated a request to supply the raw sugar deficit of the Portuguese sugar refineries, and in August 1992, the Commissions services drafted a proposal for a regulation on supplies to the Portuguese sugar refineries in what became known as the non paper.
The non-paper first brought to light the idea of maximum supply needs (MSN), for the Communitys refineries. It also introduced the idea of a hierarchy of preference: from domestic (DOM and EU Beet- raw) suppliers, to ACP under the Protocol, third country suppliers in the most favored nation, (MFN), for example Cuba and Brazil, and finally additional ACP quantities.
The SPS agreement with ACP states was reached in 1st June 1995. It is of fixed duration and the ACP states are jointly and severally liable to supply the quantities of sugar covered by the SPS agreement. The SPS agreement is for an initial period of six years, matching the duration of the new sugar regime and their refiners rights to refine raw sugar. During the period of 1 July 1995 to 30 June 2001:
-The European Community undertakes to open annually a special tariff quota for the import of raw cane sugar for refining which originates in ACP states, on the basis of the needs determined by the Commission in accordance with paragraph 3 (bilan), and
- The ACP states undertake to supply the said quantities under conditions fixed by this agreement and by the measures taken by the commission for the application of this agreement within the framework of the management of the common organization of the markets in the sugar sector. (Paragraph 1 of SPS Agreement.)
The conditions of the SPS agreement include a minimum delivered price to be paid by EU refiners, equivalent to approximately 85% of the ACP guaranteed price for raw sugar.
The quantities of the SPS for each marketing year from July to June are determined by means of the bilan which is provisionally agreed in May and finalised the following February. The SPS quota averages 10% of our total sugar exports each year.
The United States Department of Agriculture (USDA) issues sugar quotas under the Tariff Rate Quota (TRQ) system on a country -by-country basis. Under this system raw sugar is allowed into the US duty free. The 1999-2000 quota allocated to beneficiary countries was 1,135,000 metric tonnes raw value of which Guyana' s share was approximately 12,637 metric tonnes raw value.
The US quota holds approximately 5% of Guyanas total amount of exported sugar.
Caricom Market, Common External Tariff Agreement (CET)
Under the Caricom Common Market, the Common External Tariff (CET) was established to protect certain products (including sugar) produced in the region. In the case of brown (raw) cane sugar, a 40% duty is imposed on brown sugar from extra regional sources. This duty is in effect, to allow sugar-producing countries that have surplus sugar available within the Common Market to assist with meeting the intra regional requirements at competitive prices. The Caricom market makes up 15% of Guyanas total sugar exports annually.