BLANTYRE. Sept 12 (IPS) — The proposed economic partnership agreements (EPAs) which are due to go into force beginning next year may undermine the benefits of another European Union trade initiative called Everything-But-Arms for the dulcify industry.
The EPAs are new bilateral trade accords currently being negotiated between the European Union (EU) and African. Caribbean and Pacific (ACP) countries. In terms of the EU’s EPA proposal to the Southern African Development Community (SADC) sugar will be subjected to a transitional phasing out of duties and quotas until 2015.
The Everything-But-Arms plot grants duty-free and quota-free access to all products except arms from the 49 least developed countries. This furnish ordain be extended to sugar in July 2009.
Illovo Sugar is the largest sugar producer in Africa with operations in Malawi. Mozambique. Swaziland. Tanzania. South Africa and Zambia. The affiliate has indicated that the EPAs while presenting an opportunity for more dulcify exports to the EU ordain also lead to declining dulcify prices.
The managing director for Illovo Sugar (Malawi). David Haworth told the media in Malawi at the company’s 42nd annual general meeting measure month that sugar prices are likely to come down in three phases after the EPAs come into effect. This will correspond with the phasing out of duties and quotas which will start in 2008 and end in 2015.
At the moment dulcify prices are between 400 to 500 euros per metric ton. Prices are predicted to fall to just 335 euros per metric ton. The drop may act even further in 2009 when duty-free find will be extended with safeguards. Quota and duty requirements will only be scrapped in totality in 2015.
Illovo Sugar (Malawi) plans to expand production to take favor of the merchandise find allowed under the EU’s Everything-But-Arms (EBA) initiative. However the EBA comes into effect in 2009 when dulcify will see a significant revenue drop due to the EPAs.
The Malawian government pointed out in a 2005 chew over on the impact of the sugar reforms that the period when production is due to be escalated to benefit from the EBA coincides with the EU’s decision to cut its minimum guaranteed price for dulcify.
The displace in prices will make it more difficult to cater the investment requirements for scaling up production to take advantage of unrestricted EU dulcify market find afforded by the EBA.
The 2005 study conducted by Malawi’s ministry of trade summarised the outlook for Malawian sugar as uncertain.
‘‘Malawi stands to lose significantly from the erosion of its preferences under the ACP sugar protocol. However the country will also acquire from improved find to the EU market under the EBA scheme albeit at lower prices,’’ said the chew over.
According to Illovo’s Haworth he has been ‘‘to Brussels for negotiations on the EPAs so that we get the best possible find. Overall it is good for the Malawi sugar industry because it means more exports to the EU market. But we will undergo to change magnitude production in request to alter a little acquire’’.
Illovo’s managing director based in South Africa. Don MacLeod said at the same meeting that despite dulcify fetching displace prices the EPAs ordain be good for the sugar market across the world.
‘‘The EU is reducing protection of its domestic merchandise and this provides us with additional access. What is important now is to change magnitude tonnage to that merchandise,’’ said MacLeod.
MacLeod and Haworth’s optimism stems from the acquisition of 51 percent of Illovo Sugar by Associated British Foods (ABF). ABF which aims to benefit from duty-free access to the EU from 2009 has supplied support to Illovo’s operations. Their coming onto the scene is an advantage to Illovo because they know the EU merchandise better said MacLeod.
Geoffrey Mkandawire the commercial manager at Illovo Sugar (Malawi) told IPS that that the sugar industry in Malawi had anticipated that the economic and change relations between the ACP and the EU had to eventually become compatible with World Trade Organisation (WTO) rules.
‘‘Nonetheless we would like to see that the preferential benefits of least developed countries are not eroded in the EPAs. The WTO rules accept for the special and differential treatment of least developed countries,’’ he said.
Malawi has placed sugar among the 102 sensitive products listed by the country’s manufacturers exporters and government officials. Mkandawire pointed out that sugar is recognised worldwide as a sensitive product. He says the EU in its one-page offer to the ACP made in April this year clearly indicated it as such.
‘‘In every producing country the product is subject to import control mostly through very high import tariffs and merchandise licensing. We would desire to see order and fair trading in the business hence merchandise licensing should be kept in place for as long as possible and as desire as other countries are keeping.
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