New hopes of progress on controversial rice and sugar quotas

Date: 31/07/1997

HOPES are rising that a year-long battle over rice and sugar imports from Europe's overseas territories will be resolved when foreign ministers meet in September.

If so, it would end months of paralysis under the Dutch EU presidency which left the incoming Luxembourgers with a legacy of delay and controversy.

A wide-ranging 1991 trade and cooperation agreement with the EU's overseas countries and territories (OCTs) has been due for review since last year, but soon became bogged down in a clash between the Netherlands and EU rice and sugar producers.

The controversy centred on complaints, in particular from the Italians, that tariff-free rice and sugar quotas for the OCTs were being used as a back door for other producers to gain tariff-free access to the Union.

In particular, they argued that African, Caribbean and Pacific (ACP) producers should not be allowed to channel produce through the OCTs, and the Dutch Antilles in particular, without completing at least a minimum of 'transformation' or conversion from its raw form.

Under Irish proposals put forward last October, OCT exporters would have only been allowed to sell the EU a maximum of 160,000 tonnes of rice and 3,000 tonnes of sugar tariff-free.

The produce would also have needed to undergo a certain amount of transformation in the OCTs to qualify as coming from those countries.

The Irish suggested that 125,000 tonnes of the rice quota could come from the Union's ACP partners under the Lomé Convention, as long as it was partially or totally milled in the OCTs. Similarly, the sugar would have either to be moulded into sugar lumps or coloured in the OCTs to qualify.

This was completely unacceptable to the Dutch, who had obvious commercial interests in keeping rules as flexible as possible. The Hague consequently tabled a counter-proposal, demanding completely quota-free access for rice and less harsh qualifying conditions.

Although the Dutch presidency did attempt to remain impartial despite its keen interest in the dossier, maintaining a strict division between its officials in the chair and those acting as the Netherlands delegation, other EU countries were unconvinced and rejected its proposals out of hand.

These twists and turns not surprisingly led to an atmosphere of confusion and sparked anger among Caribbean exporters, who saw their large investments in danger of collapse.

Since they delayed the whole mid-term review of the regulation, the arguments also effectively froze funds from the European Development Fund (EDF) supporting a wide range of projects in the region.

All this was received with severe misgivings by Luxembourg, which was far from delighted at inheriting a minefield in which it had next to no interest.

Hoping to conclude matters as quickly as possible, the European Commission, Luxembourgers and the Dutch held intense discussions in July, ending up last week in a new compromise which could just scrape through, according to officials.

The new text envisages three levels of quota for rice. The OCTs would be granted automatic rights to export 160,000 tonnes a year, but a special committee would meet each May to discuss an optional increase of 20,000 tonnes. Finally, the Commission could, at its own discretion, propose raising the figure again as of October. Sugar would be subject to a quota of 3,000 tonnes.

In both cases, the EU local producers would need to add around 40&percent; of a product's value in the OCTs.

Foreign ministers last week took note of the proposals and called for a decision by 15 September. Although there is strong pressure for the issue to be settled once and for all, experts warn of some possible problems.

The Commission is reportedly unsure about some of the deal's implications, while Dutch calls for a guarantee that the arrangements will stand beyond the year 2000 have not been welcomed.