Now that the European Union (EU) has finalised the quantum of the drop in sugar export prices, Mauritius must turn towards the future. There is a consensus between local stakeholders of the sugar industry and foreign players like the French minister of Agriculture, Dominique Bussereau, that both the previous and the present governments have used all possible means to try and bring about changes in the initial proposal.

Since they have not succeeded, the government will now have to see how it can obtain the best financial compensation to help the country reposition its sugar industry and make it profitable.

40,000 potential job losses

The director of the Sugar Syndicate, Jean-Noël Humbert, seized the opportunity of the French minister?s visit to make a plea for a better compensation than the 40 million euros initially proposed by the EU. Basing himself on a study carried out by Landell & Mills consultants, he said 40,000 people would lose their jobs if nothing is done to reform the industry. He said that it employs 70,000 people, among whom the 25,000 small planters and the 15,000 workers in related sectors would be the great losers.

But we have not yet reached such a dramatic situation and hope that we will not have to face it. For the administrator of Mon Désert Alma S.E, Jean-Claude Hoareau, the ?next fifteen days will be extremely important for the country. The World Trade Organisation (WTO) conference to be held in Hong-Kong will be another opportunity for vulnerable economies to express their worries. If ACP and Commonwealth members have not been able to influence the decision of the EU Agriculture ministers, there is still that chance. I suppose that the two blocks have already set up a strategy. A EU expert was saying that the WTO often concerns itself more with political than strictly economic issues.?

No reform without aid

However, it seems Mauritius could undergo more problems at the WTO conference. Sugar may not be included in the list of ?sensitive products?. The EU has proposed a 60% reduction of customs duties on agricultural products. If the WTO decides to ratify this proposal, Mauritian exports on the EU market would be severely jeopardised. But the government is determined to fight for the inclusion of sugar and other agricultural products on that list. (see inset)

In fact, the country will need Rs 8 billion (220 million euros) to finance social costs and invest in sub-sectors that could be developed from ?bagasse?. Jean-Claude Hoareau makes it clear that the compensation should be given before the country takes any initiatives to put the reform into motion. ?Without European aid, the investment of billions of rupees would mean nothing in view of this brutal drop in our revenues spread over four years.?

The minister of Agriculture, Arvin Boolell, firmly believes that sugarcane has a future ahead if the EU accepts to give sufficient compensation. It is only then that the country and all ACP countries will have a chance.

The French minister seems to find it quite normal that Mauritius is expecting substantial compensation. ?You have not being standing around waiting for things to happen. You have a national strategy?. He also promised that France would give its full support to Mauritius as it has always done. ?Mauritius is in the best position to benefit from aid to developing countries. This country is the most developed among the ACP nation.?

WTO CONFERENCE IN HONG-KONG : ANOTHER HURDLE...

After the EU decided to put an end to the sugar protocol and reduce export prices by 35%, it is now the turn of the WTO to threaten our economy. Not only might some of our trade preferences disappear but the government has also expressed worries that there has not been much progress regarding the differential treatment for small island economies like ours. The government has already spotted a certain number of shortcomings in the document prepared by the WTO?s director general, Pascal Lamy, which is likely to be the basic document for discussions during the conference. Mauritian authorities have the feeling that no progress has been made since the Doha round on the development issue, which was supposed to be at the core of the negotiations. The government wants real aid by the big powers to help strengthen our industrial capacities and compensate for the end of preferences.