International Sugar Organization Istanbul workshop Tuesday 23 May 2006 The Impacts of The New EU Sugar Regime And LDC (EBA) View International Sugar Organization Istanbul workshop Tuesday 23 May 2006 The Impacts of The New EU Sugar Regime And LDC (EBA) View Mohamed El Mardi Assistant Managing Director KENANA SUGAR COMPANY (Sudan)

Agenda LDCs:Definition & Selected Economic Indicators LDCs: Membership LDCs: Sugar Producers LDCs: Sugar Production Capacities LDCs: Production, Consumption, Surplus/Deficit LDCs: Production / Consumption until 2010 EBA: Background / Mechanism LDCs: EBA Hopes & Expectations EU Sugar Reforms EU Reforms EBA Perspective Conclusions

GDP per capita (PPP)/$ ( )Population (million) Poverty (% of pop. Living below $1 a day ) ( ) ( ) Infant mortality rate (per 1,000 live births ) ( ) ( ) ( ) ( ) ( ) Definition, Economic & Indicators

LDCs Membership Africa AsiaOceaniaC/S America AngolaLiberiaAfghanistanKiribatiHaiti BeninMadagascarBangladeshSamoa Burkina Faso MalawiBhutan Solomon Islands BurundiMaliCambodiaTuvalu Cape Verde MauritaniaLaosVanuatu CARMozambiqueMaldives Timor - Lese ChadNigerMyanmar ComorosRwandaNepal Congo DR Sao Tome & Principe Yemen DjiboutiSenegal Equatorial Guinea Sierra Leon EritreaSomalia EthiopiaSudan GambiaTogo GuineaUganda Guinea – Bissau Tanzania LesothoZambia

Africa: (16 countries) Asia: (3 countries ) Others: (1) LDCs Sugar Producers

LDCs Sugar Production Capacities (2005/2006) Country No. Factories Total Crushing Cap. /TCD Design Cap. Ton/Ann. (WV) Act. Cap. Ton/Ann. (WV) Utilization of Cap. % of Cap. % Sudan546,500770,000755,00098 Ethiopia412,470275,000272,00099 Malawi211,200260,000257,00099 Congo DRC 15,00085,00045,00053 Mozambique414,400244,800225,00092 Tanzania49,080240,000218,00091 Nepal 711,200190,400125,00066 Zambia 19,500250,000230,00092 Bangladesh ,040357,680166,00046 Burkina Faso 12,68045,56040,00088 Madagascar48,000136,00035,00026

CountyProductionConsumptionSurplus/Deficit Africa Sudan805,000775,000+30,000 Ethiopia300,000275,000+25,000 Malawi255,000155, ,000 Congo DRC60,00075,000-15,000 Mozambique270,000155, ,000 Tanzania280,000270,000+10,000 Zambia240,000115, ,000 Madagascar35,000135, ,000 Burkina Faso40,00075,000-35,000 TOTAL2,285,0002,030,000255,000 Asia Bangladesh166,000445, ,000 Nepal145,000145,0000 TOTAL311,000590, ,000 Production, Consumption, Surplus/Deficit (2004/2005 MTWV)

Country Production by 2010 Consumption by 2010 by 2010Surplus/Deficit Sudan 1,845,0001,000,000845,000 Ethiopia 788,000276,000512,000 Malawi 290,000169,000121,000 Congo DRC 94,00056,00038,000 Mozambique 270,000135,000 Tanzania 300,000225,00075,000 TOTAL1,726,000 Production - Consumption – Surplus/Deficit Estimates to 2010 MTWV Production - Consumption – Surplus/Deficit Estimates to 2010 MTWV

EBA Background & Mechanism  Background: WTO Ministerial Conference December 1996 Developed Nations pledged to improve access to their markets for products originated in 49 the LDCs. October 2000 “ Lamy Initiative “ offered all LDCs access for all exports. March 2001 the EU extended its existing (GSP) to give duty free access to all LDCs. EBA sugar quota framework signed on October 2001.

 Mechanism Quota system up to 2009 Quality restriction: Raw Sugar Year Quantity 2005/06 129, /07149, /08 171, /09 197,335.00

Tariffs and quotas for EBA sugar Tariffs and quotas for EBA sugar Marketing Year Tariffs on Non- Quota Sugar Quotas/ tones (White Sugar Equivalent) 2001/2002Full duty74, /2003Full duty85, /2004Full duty98, /2005Full duty112, /2006Full duty129, / % duty reduction149, /200850% duty reduction171, /200980% duty reduction197,335

LDCs: EBA Hopes & Expectations Capacity Utilization. Capacity Utilization. Capacity Expansion. Capacity Expansion. New Investments (Sugar Projects, Sugar Related Projects). New Investments (Sugar Projects, Sugar Related Projects). Cost Efficiency. Cost Efficiency. Development Aspects. Development Aspects.

EU – Sugar Reforms Marketing year whiteRaw Eur /MT %Eur/MT% 2006/ / / /

EU Reforms - EBA Perspective  Essence of EBA initiative is the remunerative price  EBA equation: EBA – RP = 0

1. Domestic Price: 2. Freight: Eur / MT Eur / MT ( FOB) Eur / MT Eur / MT ( FOB) M/T M/T Ave Domestic price ( Ex factory - Eur / MT ) EU RP ( CIF – Eur /MT ) ( CIF – Eur /MT ) EU Reforms - EBA Perspective

3. World Prices: Supply / Demand situation Supply / Demand situation Sugar: Energy product – basket Sugar: Energy product – basket EU – WTO EU – WTO EU Reforms EU Reforms

World Export Price Comparison: Month Eur /MT (FOB) EURO /MT CIF / RS EU RP Eur / MT ( FOB) January March May

Conclusions EBA was great initiative for LDCs (Trade Vs Aid) Despite the efforts made by LDCs during the reforms discussion, EU Commission completely ignored proposals submitted the salvage the initiative Recovery of world sugar prices and high freight rates to Europe & remunerative domestic prices have made domestic markets & regional markets more attractive for LDCs exports surplus All expansion plans in LDCs sugar industries & dreams about developmental dimensions are blown off by the reforms hurricane EU reforms with respects to the severity of price reduction (36%) & time framework ( 3 years) have simply made EBA null & void & will go to the history book as a nice try from developed Nations to do nothing in bridging the gap between the rich and the poor

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