A comparison between the Cotonou Agreement and the EU Generalized System of Preferences. The case of sugar

• Published date: 22 March 2013
• Pages: 42-67
• Date: 22 March 2013
• DOI: https://doi.org/10.1108/14770021311312494
• Author: Vanessa Constant LaForce
• Subject Matter: Economics

A comparison between

the Cotonou Agreement and

the EU Generalized System

of Preferences

The case of sugar

Vanessa Constant LaForce

Division of Law, University of Abertay, Dundee, UK

Abstract

Purpose – The aim of this paper is to critically analyse the trade preferences offered by the European

Union (EU) to developing countries under the Cotonou Agreement and the Generalized System of

Preferences (GSP) in relation to trade in sugar. There is a need for a timely examination of this area,

given the context of the ACP-EU Economic Partnership Agreements and the recent termination of the

ACP-EU Sugar Protocol (SP).

Design/methodology/approach – The paper focuses on the Caribbean region as a whole with a

particular focus on two non-least developed ACP Caribbean countries, Guyana and Jamaica which held

the largest sugar quotas among ACP Caribbean which benefited from the SP.

Findings – The EU trade regime changes have affectedthe value of the African-Caribbeanand Pacific

(ACP) sugar traderegime and could have a serious impact on the amount of sugar available for purchase

on the global market. Thepaper argues that ACP Caribbean countries could find more profitable to grow

sugarcane as an agriculturalcommodity to produce biofuel, which is currently in high demand.

Research limitations/implications – The analysis in this paper is limited to the arrangements

pertaining to developing countries and therefore excludes those relating to least developed countries.

Trade in more highly processed sugars such as fructose or glucose, together with the growing trade in

biofuel refined from sugar beet and sugar cane are also outwith the scope of this discussion.

Originality/value – The paper deals with an intricate issue. It discusses the socio-economic impact of

the trade regime changes on the selected Caribbean countries and includes a section on recommendations

given the economic weightof sugar for these countries.

Keywords ACP countries, Agricultural trade, Sugar,EU Law, Preferential trade arrangements,

Caribbean, EuropeanUnion, Trade

Paper type Research paper

Nomenclature

Abbreviations

AASM ¼Associated African States

and Madagascar

ACP ¼African-Caribbean and

Pacific

CAP ¼Common Agricultural Policy

CARICOM ¼Caribbean Community

CARIFORUM ¼Caribbean Forum of ACP

States

DCs ¼developing countries

EBA ¼Everything but Arms

EDF ¼European Development Fund

EEC ¼European Economic

Community

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1477-0024.htm

The author would like to thank her supervisor, Dr Maria O’Neill, for her support and guidance

during the writing of this paper.

Journal of International Trade Law

and Policy

Vol. 12 No. 1, 2013

pp. 42-67

qEmerald Group Publishing Limited

1477-0024

DOI 10.1108/14770021311312494

JITLP

12,1

42

EU ¼European Union

EPAs ¼Economic Partnership

Agreements

FTAs ¼free trade agreements

GATT ¼General Agreement on

Tariffs and Trade

GSP ¼Generalized System of

Preferences

GuySuCo ¼Guyana Sugar Corporation

LDCs ¼least-developed countries

MFN ¼most-favoured nation

OCTs ¼overseas countries and

territories

SDT ¼special and differential

treatment

SP ¼ACP-EU Sugar Protocol

USA ¼United States of America

UNCTAD ¼United Nations Conference on

Trade and Development

WTO ¼World Trade Organisation

I. Introduction

The European Union (EU) is the largest trading partner for developing countries

(DCs) and the main destination for their agro-food products (European Commission,

2005). According to the European Commission (2008), the EU trade policy aims to

facilitate market access to the EU for DCs under preferential access arrangements.

Despite the fact that the world trading system is regulated by the World Trade

Organisation (WTO) principles of non-discrimination and most-favoured nation

(MFN), WTO members are allowed under article XXIV of the General Agreement on

Tariffs and Trade (GATT, 1994) to discriminate among trade partners by way of

customs unions or free trade areas. Such discrimination is in line with the so-called

“special and differential treatment” provisions (SDT) developed by GATT[1] and

further expanded by the WTO to account for the difficulties DCs’ face when

attempting to participate in international trade[2]. These provisions afford special

rights to DCs and allow them to receive favourable treatment from developed

countries[3].

Trade preferences offered by the EU to DCs essentially have two facets. The first

facet is the non-reciprocal preferential market access available to all DCs under the EU

Generalized System of Preferences (GSP), permitted by the so-called “enabling clause”

of the GATT (Tokyo Round, 1979). The second facet is the special access preferential

trade agreements which provide better market access to selected beneficiaries

countries. The Cotonou Agreement is one such example which has a regional scope and

is granted to the African-Caribbean and Pacific (ACP) countries by the EU[4]. The ACP

Group of States was created by the Georgetown Agreement, concluded in Guyana on

6 June 1975 (The Georgetown Agreement, 2003), and the group has its own institutions

and decision-making processes. ACP countries were former colonies of the

then-European Economic Community (EEC) members and were originally known as

the Associated African States and Madagascar (AASM)[5]. These were essentially

West and Central African countries with ties to France (The Secretariat of the African

Caribbean and Pacific Group of States Web site, 2011). The current EU trade regime

with ACP countries is the result of ties between EU Member States and their former

colonies, and was based on established trade preferences from before the “birth of

Europe itself as an organized regional entity” (The Secretariat of the African Caribbean

and Pacific Group of States Web site, 2011).

While the ACP countries are also eligible to trade with the EU under the EU’s

GSP scheme, it has long been argued that the Cotonou Agreement creates more

favourable trading conditions for the ACP countries, covering a broader range of

products, offering wider tariff cuts and more favourable rules of origin (O’Neill, 2004;

Cotonou

Agreement and

the EU GSP

43