The Cotonou Agreement is a “Partnership” Agreement between the members of the African, Caribbean and Pacific (ACP) Group of States (of which Belize is a member) and members of the European Community. (View Agreement) The Cotonou Partnership Agreement (CPA) was signed on 23 June2000 in Cotonou, Bénin – hence the name “ACP-EC Partnership Agreement” or “Cotonou Agreement”. It was concluded for a twenty-year period from March 2000 to February 2020, and entered into force in April 2003. It was for the first time revised in June 2005, with the revision entering into force on 1 July 2008.
The CPA promotes cooperation and development between the ACP Group and the European Union in three complementary pillars: development cooperation, economic and trade cooperation, and the political dimension.
Under the pillar of economic and trade cooperation, a number of Belize’s goods enter the EU market on a preferential rate—sugar, citrus, bananas and fishery products. Sugar and bananas are considered below.
As party to the Sugar Protocol (SP) under theACP-EU Cotonou Partnership Agreement, Belize exports a fixed quota of 40,348 tonnes to the EU market on a preferential basis. The EU adopted the EU Sugar Regime reform regulation which imposed a drastic price cut of 36 percent over four years beginning in 2006. The final price cut for2008/2009 crop year is projected to fall by 16.5% to Bz $46.08 per long ton, or,(from €496.80 to €448.80).
In 2006 the EU introduced, as a temporary measure, an additional quantity known as Complimentary Quota (CQ) for ACP suppliers to help meet import requirements of the European sugar refiners. A formula was finally adopted in Papua New Guinea. Under this formula Belize exported an additional 15,000 tonnes to the EU for the 2006/2007 marketing year.
Sugar and the EPA
With the conclusion of the EPA negotiations between the ACP and the EU, as of 2009 Belize will continue to export its sugar to theEU on a duty free and quota free basis. Sugar, similar to other products that were granted duty free and quota free access to the EU market. However, the terms of trade have changed significantly as the EU has liberalized its market for sugar and this former ”preference” that was only given to the ACP under the Cotonou Partnership Agreement is now being extended to all Latin American exporters of sugar in the world that are more competitive in the market. In effect, with more trade in sugar on the market will create a downward pressure on prices.
Belize’s exports of Bananas to the EU under the rubric of the CPA have been under tremendous pressure from Latin American exporters. As a result, in January 2006, the EC introduced a new element of a tariff only to its banana regime. The new tariff level was 176 Euros per ton for most favored nations (MFN) suppliers such as the Latin American suppliers (for example, Chiquita Bananas). The EU had to set this tariff to be in compliance with its WTO obligations. This new change meant that 60% of the ACP quota entered the EU on the basis of a First Come/First Served (FCFS) system, that is, those countries that can export their bananas in the early crop season get access;, and the other 40% on the basis of licenses granted to market operators based on past trade. Despite strong resistance from Belize and some CARICOM countries, this formula was further amended so that from 1 January 2007, 81% of the ACP quota entered on a FCFS basis of licenses and 19% under licenses. These changes adversely affected the income of growers. In effect, Belize actually had to pay over US$1.5 million to access the EU’s market.
Bananas and the EPA
A Declaration on Bananas is enshrined in theEconomic Partnership Agreement between the ACP Group and the European Union (EU). By virtue of that declaration Belize’s bananas continue to be exported to the EU on a duty free quota free basis along with other Latin American competitors. With more competition of bananas on the market, similar to trade in sugar with the EU, the effect on prices is negative.