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British Sugar Advertisement Feature

Brexit can benefit the poorest countries that produce sugar

13 March 2017

5:21 PM

13 March 2017

5:21 PM

There are more than 110 sugar-producing countries in the world. In many small nations, sugar cane is the No. 1 crop – their economies rely on it. Cane sugar production plays a particularly significant role in the economies of African, Caribbean and Pacific (ACP) countries, many of which are Least Developed Countries (LDC). For places like Belize, Guyana, Malawi, Mozambique and Swaziland, cane sugar generates export earnings, creates employment and often provides a lone source of income for rural communities, lifting them out of poverty.

But this is now under threat. For development reasons, such lower-income countries are currently entitled to duty-free access to the European Union (EU) market. Selling sugar to Europe is vital to their economic aspirations. But a change to EU rules from October 2017, which will see the abolition of production quotas on beet sugar and isoglucose for EU-based farmers, will most likely increase EU beet sugar production and reduce demand on the Continent for imported sugar by half from 3.2 million tonnes to around 1.6 million. About 65 per cent of that imported sugar is currently supplied from ACP and LDC countries.

The effects of this market cut-off will differ from country to country; different developing-country sugar industries have different levels of exposure to the EU and different abilities to diversify into other markets or products. Many have already taken steps to meet the challenge of quota abolition. But they vary considerably in their level of readiness and indeed their ability to cope.

Many of these governments do not have the resources to mitigate this impact. Poorer cane-producing countries are effectively being squeezed by richer nations — despite being efficient and productive.

In Britain, we are preparing to leave the EU. This presents us with an opportunity to support our goals on international development and promote global trade as the most important driver of economic growth for Least Developed Countries. The UK government should heed the plight of these cane sugar growers and acknowledge the development benefits that the sugar industry provides by structuring a new trading system that can give them a sustainable price for their sugar.

This could be achieved in a careful, more development-friendly arrangement by, among other things, guaranteeing the continuation of tariff-free access to the UK for cane sugar from African, Caribbean and Pacific countries while retaining tariffs on raw and refined sugar from other countries, particularly those which receive market-distorting support from their governments.

This isn’t about the UK giving a subsidy to developing-nation sugar growers. It is about giving recognition to the role that such growers play in their national economies and helping them stand tall by offering preference to a world market that is distorted by direct and indirect subsidies in the largest producing countries. This would not only acknowledge the development benefits of sugar but would help create a fairer and more level playing field. The UK has led the world in its aid commitments and it must do so again with its trade policy.

Attributable to Philip De Pass, ACP/LDC Sugar Industries Group representing LDC/ACP national sugar industries

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