In an interview with PACNEWS in March 2014, the head of the political and trade section of the EU Delegation in the Pacific, Adam Janssen, set out the options available to Pacific ACP countries in the light of the lapsing of EU Market Access Regulation no. 1528/2007 on 1 October 2014. Mr Janssen asserted that “for Fiji to continue to benefit from duty-free, quota-free preferential access to the EU market, Fiji will either need the Interim Economic Partnership Agreement enforced or a regional comprehensive agreement.” Mr Janssen pointed out that “the regional agreement is still under negotiation, whereas the interim agreement has been ready for the past seven years.” In the absence of one of these, Fiji would face (GSP) import duties on its exports to the EU in competition with suppliers that continue to enjoy duty-free access. In the case of sugar, this duty would amount to €339/tonne. This compares to an average import price in February 2014 for raw sugar of US$605/tonne (approx. €439/tonne at 8 May 2014 exchange rates).
Sugar: Average monthly EU and world market import prices for February 2013 and September 2013 to March 2014 (US cents/lb)
|EU raw sugar price||World market raw sugar price||EU as % of world market price|
World market prices: http://www.indexmundi.com/commodities/?commodity=sugar&months=60
Mr Janssen observed that two other non-least developed ACP sugar exporting countries were in a similar position to Fiji, namely Swaziland and Zimbabwe. (LDCs enjoy duty-free access to the EU market under the unilateral EBA – ‘Everything but arms’ –initiative.)
In the Pacific context, looking beyond sugar exporting ACP countries, Mr Janssen pointed out that Papua New Guinea “has already ratified its interim EPA, so its trade with the EU is safe” (i.e. its fisheries and palm oil exports).
The EU representative refrained from commenting on the current position of the Fijian government on the question of ratification of the interim EPA, but noted that the EC had no problem with the current administration ratifying the interim EPA, as it was up to each ACP government to complete the ratification process in line with its own internal procedures. He also clarified the EU’s position on the potential impact of a regional EPA on the bilateral interim EPAs that have been concluded, maintaining that “the interim agreement will not be put in jeopardy in any way.” He stated that “the regional agreement is supposed to replace the interim agreement. The interim agreement has no deadline or expiry date. If there is no comprehensive agreement, the interim agreement can go on forever.” However, if a regional EPA is concluded, “it will override the interim agreement.”
In Europe, there is currently concern among European industrial users of sugar regarding sugar stock levels in the EU and EC policies for managing the European sugar market. According to reports on the website Foodnavigator.com about concerns expressed by the European Sugar Users Organisation, CIUS, although EU sugar prices have been falling since agreement was reached in June 2013 on the abolition of EU sugar production quotas from October 2017 (down by 14.8% in February 2013 compared to February 2012), nevertheless EU sugar prices were still “39% greater than the world price”.
The process of ratification of Fiji’s interim EPA is a relatively straightforward administrative task under the current political dispensation. All that is required is for a paper to go to Cabinet and a decision to be reached there. But in the interests of regional solidarity, the government of Fiji appears to have been hoping that the negotiation of a comprehensive regional EPA would be completed before the October 2014 deadline, with this leading to improvements in the region-to-region trade framework. It remains unclear whether a regional EPA will be concluded before October 2014, as elections in Fiji are scheduled to take place on 17 September 2014.
In light of the October 2014 deadline for completion of the interim EPA process, the current uncertain situation could soon carry implications for commercial relations, with few EU processors likely to want to depend on imports that could face increased import duties from 1 October 2014. The lack of resolution of this issue could therefore begin to feed through into sugar sector commercial relations in the third quarter of 2014.
However, disruption of sugar supplies from the three ACP countries potentially facing additional tariffs if the EPA process is not completed by 1st October would not be welcomed by European sugar users or traditional EU sugar refiners – since 2009/10, these countries have accounted for around 32% of total ACP sugar exports to the EU.