Sugar Agreements - Glossary

Bilan:

Twice a year, the European Commission draws up a raw sugar balance sheet known as the “Bilan” in French, first to establish where the refiners’ raw sugar supplies are coming from and secondly, to open tariff quotas for Special Preferential Sugar (SPS) to cover any missing quantities of the refiners’ needs.

Cotonou Agreement:

The Cotonou Agreement takes its name from the capital of Benin where it was signed and represents a new partnership of cooperation between the European Union and the 77 African, Caribbean and Pacific States (ACP).

The purpose of the agreement is to allow the EU and the ACP countries to work together for poverty reduction, sustainable development and the gradual integration of the ACP countries into the world economy. The agreement covers cooperation in the form of the aid, cultural and social assistance to the ACP countries, many of which are former colonies of the European Nations that are now Members of the European Union. The assistance aimed at promoting the development of ACP states with the intention of contributing to peace, security and a stable and democratic environment. The agreement includes the political dimension of development and recognises closer involvement of civil society, the private sector and the economic and social sectors.

Cotonou represents an improved and upgraded version of the previous agreements (Lome I to IV) that existed under the earlier programmes of cooperation.  The European Commission and the ACP countries have agreed that the Cotonou Agreement will last for twenty years and will be reviewed every five years.

DOM (Departements Outre Mer): 

The political status of the Departements Outre Mer (DOMs) is that they are a part of France and so sugar markets in the DOMS are organised under the same general rules as for the rest of the EU. The three DOMs, which produce sugar, are Reunion, Guadeloupe and Martinique. The geographic position of the DOMs puts them at a disadvantage compare with the other sugar producing regions and hence a number of community subsidies exist which are known as marketing aids, designed to compensate for transport and insurance costs and the relatively unsophisticated agricultural structures in the DOMs. The purpose of the transport and insurance subsidies is to equalise the institutional price to refiners of raw sugar CIF European ports, be it DOM, ACP, SPS or MFN.

GATT (General Agreement on Tariffs and Trade):

GATT was signed in 1947 and first entered into force in January of 1948 on a provisional basis in the expectation that in due course, an International Trade Organization would supersede it.  The most favored nation clause is the subject of the first article in GATT. The origin of MFN is this: for centuries, traders coming to a foreign country have said, “ what tariffs dues and regulations you apply is your affair, but please don’t treat us worse than traders coming from other nations. We want the treatment accorded to the most favored nation.” And so the GATT provides for MFN in tariffs and all trade regulations. The GATT rules on non-discrimination are subject to exceptions, there are two broad exceptions in GATT from the MFN requirement:

• The GATT allows the maintenance and formation of customs unions and free trade areas and
• The GATT allows and even encourages discriminatory arrangements in favor of developing countries under which developed countries accord tariff preferences to developing countries.

MFN (Most Favored Nation):

In 1995, in conjunction with the review of the sugar regime and the SPS arrangements, the Community also provided for a fixed quantity of raw sugar to be imported from Cuba (69%), Brazil (28%), and other countries under agreed arrangements (3%). This has come to be known as the Most Favored Nation (MFN) sugar, recalling the GATT principle of MFN.  Under the MFN sugar arrangements, the European Community must open an annual tariff quota for 85,463 metric tonnes tel quel (mttq) or (82,000 metric tonnes of white sugar equivalent) of raw sugar for refining at a duty of 98 European Currency Units (Euros) per tonne at 96 degrees polarization. This quota provides for an MFN price equivalent to roughly 80% of the ACP guaranteed price.

MSN (Maximum Supply Needs):

The Council of the EU in 1995 determined the maximum supply needs (MSNs) of each of its member states. As with beet sugar quotas, the MSNs were fixed for six years until 2000/01. In order to meet the refiners’ MSNs, raw sugar is supplied and imported under the following “hierarchy of preference”: DOM, ACP Protocol and Indian preferential sugar, MFN and SPS.

WTO (World Trade Organization):

On 15 April 1994, ministers representing 124 governments and the EU signed the Final Act of the Uruguay Round and the Marrakesh Agreement establishing the World Trade Organization. Based in Geneva, Switzerland its member countries account for more than 90% pf world trade. The WTO agreement includes “GATT-1994”, which is based upon the text of the original “GATT-1947”, a set a rules for the conduct of international trade.  Since its inception, the WTO acts as an independent international organization to facilitate the implementation, administration and operation of the 1994 Marrakesh Agreement.  The WTO also provides a forum for trade negotiations amongst its members.