Guyana is situated on the north east coast of South America. It has a population of 850 000 in 1997 and a land area of 215 square kilometres, the disputed areas included. Per caput gross national product (GNP) in 1997 was US$800. About 16 percent of the population, some 130 000 people, are classified as undernourished. Agriculture plays an important role in the economy. Within agriculture, sugar and rice are the two most important sectors and together account for over half of agricultural GDP. The sugar sector (including molasses) accounts for 10 percent of GDP and 37 percent of total agricultural production, employs about 10 percent of the working population and is responsible for 60 percent of agricultural exports. The rice sector accounts for 8 percent of GDP and 20 percent of total agricultural output and in recent years has been responsible for 36 percent of agricultural export earnings. The agricultural sector suffered a major decline in the 1980s, but many sub-sectors recovered in the 1990s.
In January 1995, Guyana joined many CARICOM countries acceding to the WTO Agreement with considerable non-specificity in its Schedule and reflecting non- stringent trading conditions. This applied to all the main areas of the WTO Agreement.
Guyana had, through a series of economic reform measures, reached a stage already prior to 1995 where it was complying with most of the requirements that were subsequently incorporated in the AoA. Non-tariff barriers (NTBs) were largely removed and replaced by tariffs. Negative lists, quotas and licensing restrictions that existed in the 1980s were all eliminated. In the UR, Guyana did not "tariffy" (i.e. establish base tariff rates through computed tariff equivalents) but opted for tariff bindings. The resulting bound rates, in several instances, were more lax (i.e. higher) than those agreed to under the CET of CARICOM (Table 1).
Table 1: Guyana's Uruguay Round tariff commitments in agriculture
Bound tariff |
Other duties or charges |
100 percent on all agricultural products |
40 percent, with the following exceptions:
|
Applied tariffs, by contrast, are fairly low in most cases, mainly for two reasons:
First, current agricultural and trade policies are the result of major policy changes initiated in 1988 with the Economic Recovery Program (ERP). The ERP was implemented with International Monetary Fund/World Bank assistance and included liberalization of the capital and labour markets, deregulation and privatization of public enterprises, and tax and trade reforms, particularly the removal of export restrictions and the opening up of the domestic economy to imports. The elimination of negative lists, quantitative restrictions, price controls, and cumbersome import licensing arrangements were of particular importance for agriculture.
Second, there was the major policy shift which led to increased liberalization of trade in general and agricultural trade in particular, namely the entry into force of the common external tariff (CET) by CARICOM in 1993, whereby national tariffs were reduced and tariff structures simplified. The common external tariff differentiates between whether a good is an input, intermediate product or a final (consumer) product and whether it is produced within or outside the region. Final goods competing with those produced within the region pay the highest tariff, while inputs from outside the region pay the least. Guyana was one of five countries implementing the CET reform on a fast-track basis and reduced tariffs accordingly from 45 percent (on competing final goods) in 1993 to 25 percent in 1996. When all CARICOM countries have completed implementation (the original target date having been 1998), the CET is expected to range from zero (non-competing inputs) to 20 percent (competing final goods).
Several agricultural commodities, however, remain important exceptions to the CET rate of 40 percent plus consumption tax of 10-30 percent. Thus, while liberalization has deepened generally, there is scope for providing protection to some agricultural products, if deemed necessary.
As Guyana did not "tariffy", it does not have access to the special agricultural safeguard (SSG) and so there is no experience with this trade instrument. Likewise, since it did not open any TRQs, it has no experience in their implementation.
In the UR, Guyana did not submit any information on domestic support measures in its Schedule. Domestic support for the agricultural sector has changed considerably over the last two decades as Guyana moved away from guaranteed prices, subsidized input and marketing facilities. Thus, when WTO was established it had already removed its most offensive trade-distorting domestic agricultural support policies. Given the low levels of support generally and the de minimis exemption, Guyana did not feel the need for calculating an Aggregate Measurement of Support (AMS). In practice, support for the sector has been mainly through rural infrastructure projects (rehabilitation of roads, drainage and irrigation facilities), general services related to research, training and extension, fiscal policy related to investment measures and assistance in the maintenance of preferential marketing arrangements. This support is largely in keeping with the allowed "green box" policies that do not have a major effect on production and trade. Hence it is unlikely that the AoA provisions and Guyana's own commitments had any significant consequence for agricultural support programmes implemented during 1995-1999.
Guyana's agricultural exports are largely sugar and rice, both of which are sold in preferential markets, primarily in Europe. They do not receive export subsidies and are actually taxed as a source of domestic revenue. In the case of sugar, an estimated 16 percent of the transfers (about US$14 million) made in 1996 was earmarked for the National Treasury. The rice industry pays a levy of US$6 per tonne to the Government and US$6 per tonne to the Guyana Rice Development Board. The latter is responsible for the regulation of grading, research and extension for the rice industry and for providing assistance on marketing (primarily information). Thus, the export subsidy provisions and reduction commitments do not currently apply to Guyana.
Conforming to other provisions and regulations of the WTO has not been a major challenge for Guyana. This is largely because of the trade reforms introduced in the period preceding the signing of the WTO Agreement as a result of which the trading regime largely complied with WTO requirements. However, it is anticipated that in future years there will be a greater impact as tariffs are reduced further. Much of the immediate concern over the impact of trade liberalization on the agricultural sector arises more from the policies of other countries and regions and how they may affect access for Guyana's major exports. This is indeed the most important concern for Guyana arising from the UR and so is discussed in depth in the next section.
Sugar and rice are major agricultural export earners, sugar accounting for 60 percent of the total in 1995-98 (down from 78 percent in 1985-87) and rice for 36 percent (up from 14 percent in 1985-87). Export performance of these two commodities is therefore analysed in detail below, following a review of agricultural trade as a whole.
Figure 1 shows the evolution of total agricultural trade during 1985-98, while Table 2 summarizes relevant statistics. Thanks to sugar and rice, the total value of agricultural exports in 1995-98 was 51 percent higher than in 1990-94. Despite the positive trend since 1985, it was still 16 percent above the extrapolated trend value. Total agricultural imports also rose markedly, reflecting the rising trend for food imports (see below). The value of agricultural imports in 1995-98 was 38 percent higher than in 1990-94, but virtually the same as the trend values. Since exports are far greater than imports, there was a net agricultural trade surplus, which was 57 percent higher in 1995-98 than in 1990-94 and 23 percent higher than the trend value.
Figure 1: Agricultural trade, 1985-98 (in million US$; thick lines are actual values, thin lines are trends for 1985-94, extrapolated to 1998)
Source: FAOSTAT
Table 2: Agricultural trade in 1990-94 and 1995-98 (average annual value, in million US$, and percentage change)
Period |
Exports |
Imports |
Net exports |
|
1990-94 actual (a) 1995-98 actual (b) 1995-98 extrapolated (c) 1
(b) - (a) 2 (b) - (c) 2 |
152 230 198 78 (51 %) 32 (16%) |
44 60 60 17 (38%) 0 (0%) |
108 169 138 61 (57%) 32 (23%) |
1 Extrapolated value based on 1985-94 trend. 2 Numbers in parentheses are percentage changes over (a) and (c) respectively. Source: Computed from FAOSTAT data. Agriculture excludes fishery and forestry products. | |||
In the late 1980s and early 1990s, the Government introduced a number of measures that contributed to a phenomenal expansion in the production of and trade in rice (Figure 2). Price controls were abandoned and farmers and millers were allowed to sell rice freely on the domestic and export markets. Around the same time, a rice trading opportunity arose, mainly for Guyana and Suriname, the only two rice producers in the African, Caribbean and Pacific Group of States (ACP). This opportunity, known as the Overseas Countries and Territories (OCT)-route, allowed rice produced in ACP countries and exported via the OCT route to enter the EU market free of any duties and quotas. Guyana's producers and marketers seized this opportunity and at its height in 1996 over 90 percent of all Guyana's rice exports went to EU, essentially through the OCT route.
Figure 2: Rice production and exports, 1990-1998
Source: FAOSTAT
Despite the additional transportation charges resulting from shipment via the OCT route, export earnings increased, since rice shipped to Europe directly (under Lomé terms) attracted a 50 percent duty. The high prices that producers were thus able to obtain were a major cause of the expansion in rice exports from 93 000 tonnes in 1990 to 330 000 tonnes in 1996. The export situation changed substantially in 1997 as EU responded to the duty-free import surge by modifying the OCT arrangement and introducing safeguards. An OCT quota of 35 000 tonnes was instituted in addition to the regular direct route quota of 145 000 tonnes (125 000 tonnes of semi-milled rice and 20 000 tonnes of white broken). As a result, the geographical distribution of Guyana's rice exports changed sharply. In 1997, only 47 percent went to the EU market and the proportion of total exports shipped via the OCT route fell from the previous 90 percent to only 19 percent, a further 28 percent going via the previously little used direct route. The remaining 53 percent of exports was marketed in the CARICOM countries (31 percent) or exported to non-traditional markets (22 percent).
During the 10 years, 1985-94, rice exports increased linearly at the rate of 13 000 tonnes per year. The average volume exported in 1995-98 (249 000 tonnes) was 137 percent higher than in 1990-94 (10 000 tonnes). It was also as much as 47 percent higher than the amount derived from an extrapolation of the 1985-94 trend. In other words, Guyana's experience with rice exports has been positive.
The developments in the rice market facing Guyana, while not directly the result of the AoA, are certainly the result of the heightened sensitivity to commodity trade changes in the global market place which devolve from a new international economic environment associated with WTO policies.
Several trade challenges face the rice industry in this new era. The first is how to maintain preferential access to its two major markets, namely EU and CARICOM. The 20 percent CET for rice in the latter region provides some level of protection if Guyana can reduce its production costs and increase its quality. The same applies to the EU market, where the 100 percent levy on most third-country imports provides protection against non-European producers. However, Guyana still has to pay the 50 percent levy on all exports to EU, where trading opportunities have become more complicated with a licensing system that has further reduced imports from Guyana. The 125 000 tonnes quota of semi-milled rice is now handled in three tranches of 41 600 tonnes each, with European purchasers applying for licences to purchase. Suppliers must wait for the outcome of this process, which is not synchronized with optimum harvesting and delivery times, and since licences are given when tranches start and finish, delivery may not be possible.
A related problem is that some suppliers do not take up allocated licences. The present system allows traders in EU who compete against ACP to manipulate the system by applying for a licence with no intention of using it. The licence can be returned within the two-day grace period and these volumes may be lost to ACP suppliers. The experience of this new system is that it reduces the quota and depresses the domestic market price. Both these outcomes lead to reduced earnings from rice. The administrative problems related to the licensing arrangements have limited the direct route to well below the 125 000 tonne quota for semi-milled rice. Thus, as seen above, a larger proportion of Guyana's rice must be marketed in non-preferential markets.
The second challenge is for Guyana to maintain and expand its new markets in face of several difficulties. The fall in world market prices in July 1999 makes it harder for Guyana to introduce the changes at the domestic level that would lead to increased quality and lower costs of production. Also, when Guyana made inroads into these new markets, they were more readily accessible due to the effects of El Niño in several competing countries. In 1998, El Niño contributed to lower levels of paddy production in Guyana itself, causing the domestic price of paddy to increase, thereby reducing the ability of the rice sector to compete in the non-preferential market. Recently, increased production in Brazil, an important purchaser, has also led to more rice being available on the export market from other sources in the region (Argentina and Uruguay). Thus, Guyana needs to be prepared to face this increased competition. The issue of timely shipments, as in the EU market, is also critical for maintaining and expanding access to other markets.
A third challenge is how to influence the international rice market in the United States and EU and open it up further. This is a daunting challenge, because while on the one hand Guyana loses market access on account of the subsidies to higher-cost domestic producers in the United States, Spain and Italy, on the other it needs these countries to be tolerant of its export supply under the current EU preference regime. The Resources needed for preparing, presenting and negotiating Guyana's rice case in the WTO framework is also seen as a significant constraint to the future development of the industry.
After a considerable decline in the mid-1980s, sugar production and exports have expanded steadily since 1990. From 132 000 tonnes of production and 13 000 tonnes of exports in 1990 they rose to 258 000 and 237 000 tonnes respectively by 1998 (28 000 and 25 000 tonnes respectively at their peaks in 1996) - see Figure 3. The average volume of sugar exports in 1995-98 was 24 percent higher than in 1990-94. Since the trend during 1985-94 was positive, the 1995-98 exports were only 13 percent higher than the extrapolated trend amount. Thus, the post-UR experience with sugar exports has been positive, although much less impressive than with rice.
Figure 3: Sugar production and exports, 1990-1998
Source: FAOSTAT
Guyana exports almost all of its sugar under preferential arrangements to the United States and EU. Under the latter's Sugar Protocol, it receives a quota of 158 000 tonnes. It also exports an additional 30 540 tonnes under the Special Preferential Sugar Arrangement that is to remain in place until 2001. Guyana's base quota in the United States market for 1995-1996 was 12 261 tonnes, but through a series of reallocations it was increased to 27 486 tonnes. Since 1991 Guyana has met its quota allocations and is gaining the reputation of a reliable supplier. The remaining sugar is exported either to other CARICOM countries with the assistance of CET protection or to the world market, where Canada is a major purchaser.
Production costs have ranged from US$0.15 to US$0.25 per pound in recent years, the top of the range being the result of drought years which lowered yields. At these costs Guyana can export profitably to the preferential markets at the higher prices offered there (twice the world market price). Given projected world prices of less than US$.012/lb, Guyana's sugar industry would have to increase its efficiency considerably to be competitive in the open market.
Despite the apparent legal assurances of the Sugar Protocol of the Lomé Convention, there are still concerns whether this preferential trade is WTO-compatible. Article 1 of the ACP Sugar Protocol succinctly summarizes the understanding of ACP States that the Protocol is a trade agreement of indefinite duration between EU (the European Communities, or EC, in formal terms) and the nineteen ACP states that are signatory to it2. All the guarantees contained in the Sugar Protocol of 1975 are also enshrined in Lomé IV. This legislation is obviously of immense importance to the ACP countries because Lomé IV has an expiry date of 29 February 2000 and the EU has made it explicit that the successor agreement has to be WTO-compatible, though taking into account the special status of the Sugar Protocol. The ACP States maintain that under the UR it was agreed that current access must be maintained at 1.3 million tonnes of ACP sugar to the EU market. Moreover, they claim that the Sugar Protocol is compatible with WTO rules.
The relative importance of other "non-traditional" crops and livestock has declined in recent years, with the resurgence of the sugar and rice sector. Given the narrow coastal strip where Guyana's agricultural production is concentrated, the direct trade-off between agricultural activities for resources has long been a feature of the production cycle. The coconut industry is important as the basis of the edible oil industry. It is also important in terms of non-traditional exports, mainly copra to Trinidad and Tobago. The non-traditional export products include a wide variety of fruit, vegetables, spices and condiments, but the volume of trade is small, in both absolute terms and relative to total domestic production (less than 5 percent). Table 3 shows recent trends in exports of these products, which are mainly to CARICOM markets. Within CARICOM, the main market is Trinidad and Tobago and the main product is copra, a direct beneficiary of the CET protection. Extra-regionally, the main crop is heart of palm, exported exclusively to France. The decline in the total of non-traditional exports is particularly worrying, given the efforts towards agricultural diversification and the vulnerability of relying on two traditional export products (sugar and rice).
Table 3: Exports of major non-traditional commodities 1995-98 (in tonnes)
Commodity |
1995 |
1996 |
1997 |
1998 |
Copra |
1 678 |
1 090 |
501 |
512 |
Lime |
35 |
71 |
71 |
- |
Mango |
141 |
143 |
105 |
168 |
Pineapple |
309 |
394 |
138 |
13 |
Plantain |
87 |
98 |
13 |
410 |
Pumpkin |
158 |
217 |
119 |
15 |
Pepper |
33 |
29 |
35 |
32 |
Heart of palm |
1 648 |
1 456 |
1 700 |
1 051 |
Total |
4 662 |
3 232 |
2 997 |
2 374 |
Source: Bureau of Statistics, Georgetown, Guyana.
There is very little connection between the AoA and this export decline. Changes in trade preferences within the region and in the Americas have affected access conditions as the CET has been reduced and NAFTA's preferences to Mexico have eroded the incentives to producers benefiting from the Caribbean Basin Initiative (CBI). The data for recent years reveal that where Guyana could have raised its exports to the United States market, Mexico's exports to that market have increased significantly. With the identification of the Pink Hibiscus Mealybug in Guyana, a partial trade embargo has been imposed on its exports to the three main CARICOM markets - Antigua, Barbados and Trinidad and Tobago. The products affected are pineapples, limes, watermelons, pumpkins and small vegetables. Trinidad allows imports only of pineapples, pumpkins and plantains.
There are a number of issues connected with exports of non-traditional products to extra-regional markets. Evidence of past infractions (fruit fly or utilization of specific chemicals) may no longer be accurate and the United States ruling outdated. Nevertheless, Guyana's marketing and trade representations have been unable to convince the United States authorities to change the past ruling. At best, the process is cumbersome and takes too long to rectify. This has resulted in Guyana losing markets not only in the United States but also in other countries that take their lead from the United States Animal and Plant Health Inspection Services (APHIS). This type of situation also affects the livestock sector, where Guyana is categorized with Brazil as having foot and mouth disease, thereby delaying certification for beef exports. Guyana needs enabling assistance in terms of both increasing compliance and influencing the machinery globally that governs its performance.
Two particular constraints to increased diversification of exports were identified by non-traditional crop exporters. Firstly, they highlighted the non-payment for shipments dispatched to overseas buyers and the limits this placed on developing a credit market to assist the marketing of produce. Secondly, non-traditional fruit exports are still largely restricted to cargo space on passenger flights and this space has been very limited.
To date, the trade policy changes in Guyana that have led to increased access to the domestic market have resulted more from the World Bank/IMF SAP and its conditionality and from implementation of the CARICOM CET, than from the AoA or other WTO rules. However, there are concerns over the substitution of domestic production by imports as the WTO liberalization process deepens. The evidence so far is inconclusive, but food imports have been rising rapidly, having more than tripled from 1985-1987 (US$15 million) to 1996-1998 (US$50 million).
Guyana is a net food exporter: in 1990-94 the value of food imports was only 25 percent that of food exports. Since food products account for over 90 percent of all agricultural exports food exports follow closely the trend of agricultural exports, discussed above. Thus, in 1995-98 they were 55 percent higher in value than in 1990-94 and still 18 percent higher when measured against the extrapolated trend value, which reflects the strong positive trend during 1985-94 (Figure 4 and Table 4).
Food imports in 1995-98 also increased sharply over 1990-94, by 41 percent. Since the trend had been strongly positive, there was no difference between the actual 1995-98 value and the extrapolated value for this period. Net exports in 1995-98 were 60 percent higher than in 1990-94 and 24 percent higher than the trend value.
In the final analysis, what was the experience with total food imports relative to total agricultural exports? During 1985-87, the ratio was 0.15, - i.e. food imports were roughly 15 percent of agricultural exports. The ratio increased sharply during the late 1980s and has been fluctuating around 0.22 since then (Figure 5). It averaged 0.22 in 1995-98, some 9 percent lower than in 1990-94. Because of the strong positive trend during 1985-94, the 1995-98 ratio would appear to be markedly below that obtained from the extrapolated trend. Thus there has been some improvement in the balance between food imports and agricultural exports.
Figure 4: Food trade, 1985-98 (in million US$; thick lines are actual values, thin lines are trends for 1985-94, extrapolated to 1998)
Source: FAOSTAT
Table 4: Food trade in 1990-94 and 1995-98 (average annual value, in million US$, and percentage change)
Period |
Exports |
Imports |
Net exports |
|
1990-94 actual (a) 1995-98 actual (b) 1995-98 extrapolated (c)1
(b) - (a) 2 (b) - (c) 2 |
143 222 188 79 (55%) 34 (18%) |
36 50 50 15 (41%) 0 (0%) |
108 172 138 64 (60%) 33 (24%) |
1 See note 1 to Table 2. 2 Numbers in parentheses are percentage changes over (a) and (c) respectively. Source: Computed from FAOSTAT data. Food excludes fishery products. | |||
Figure 5: Ratio of the value of total food imports to that of total agricultural exports, 1985-98
Source: FAOSTAT
Although recent trends in total food imports are a cause of concern, the concern is greater for those products of which domestic output is most exposed to competition from exports. The two food products where import surges have been particularly strong are dairy products (mainly milk powder) and poultry meat, as described below:
Imports of milk products tripled from 1985-87 ( annual average of 11 000 tonnes) to 1996-98, reaching 33 000 tonnes. In value terms, the import bill rose five times, from US$3 million per annum to US$15 million.
Apart from their balance of payments effect, these rising imports are a matter of concern because of their impact, as in several other countries of the region, on domestic production. While there is good reason to conclude that the more transparent import regulations and lower tariffs have led to greater imports, particularly since 1991, there have also been problems within different segments of the domestic market. The milk processing sector, controlled by the Government until recently, and not successfully transferred to a private sector entity, has failed producers in terms of deliveries, processing and marketing of milk. It is thus hardly surprising that growth of the domestic milk sector has not taken place as expected, which in turn contributed to increased imports. A continuation of this trend would almost certainly result in the cessation of domestic output.
Imports of poultry meat have been growing fast. From a negligible quantity in 1985-87 they rose to an annual average of 5 000 tonnes in 1996-98 and in value from US$150 000 to US$6 million.
The threat to the poultry sector arises mainly from imports of chicken parts from the United States. Several factors, in addition to import liberalization, contributed to this trend. Liberalization itself made it easier and attractive to establish fast-food centres, which found it cheaper and more reliable to import meat for further processing than to purchase locally. Second, the domestic poultry production sector was almost wiped out under the restrictive foreign exchange regime and trading environment of the 1980s and is now in the process of returning to the point where all poultry products may be produced domestically.4 Also, the almost total dependence of this sector on imported feed leaves the issue of some degree of self-reliance unresolved. Third, there are real concerns that the absence of adequate health and inspection monitoring services has led to imports of inferior products, sometimes exceeding the expiry dates. Thus, improved laboratory facilities for managing SPS regulations are needed not only to assist non-traditional exports as indicated above, but also to protect the domestic market where justified. This calls for appropriate anti-dumping legislation and establishment of a monitoring unit.
Table 5: Imports of major food commodities in 1994, 1997 and 1998
(in tonnes)
Commodity |
1994 |
1997 |
1998 |
Milk |
3 278 |
4 253 |
5 461 |
Frozen chicken |
9 299 |
4 903 |
5 387 |
Onions |
881 |
3 268 |
5 009 |
Garlic |
840 |
1 385 |
2 092 |
Apples |
515 |
286 |
327 |
Orange juice |
2 246 |
1 293 |
1 020 |
Split peas |
1 063 |
4 593 |
3 733 |
B'Eye peas |
14 |
4 593 |
3 733 |
Chick peas |
83 |
1 066 |
1 032 |
Wheat |
17 269 |
7 050 |
10 818 |
Cabbages |
43 |
29 |
42 |
Carrots |
281 |
433 |
478 |
Frozen potatoes |
756 |
247 |
329 |
Source: Bureau of Statistics, Georgetown, Guyana. |
|||
In conclusion, it is clear that trade liberalization has played an important part in the recent surge in imports - several of the main foodstuffs now imported were produced domestically in the 1980s when a protective cover kept out imports. For example, fruit juices from as far as France and Thailand have displaced domestic production. Producers and traders of beans feel that increasing imports have led to a decline in the production of the minca peas, developed and spread throughout Guyana in the 1980s. The same applies to local cabbage and carrot. It is thus feared that without adequate market protection, accompanied by development programmes, many more domestically produced commodities will be displaced. This would transform the domestic diet, leading to continued greater dependency on imported foods. The data suggest that this process is well under way for several basic foodstuffs (Table 5) and that the reduction of border protection, the lack of preparedness to monitor imports and the inadequate support for the domestic agricultural sector, especially the non-traditional sector, are adversely affecting domestic production. It is important for Guyana to spell all this out in future negotiations and link trade and investment activities more closely, as well as to adopt specific commodity plans within fixed time horizons reflecting the country's commitments within the WTO framework and its own development goals.
The next round of negotiations is of considerable importance to Guyana as several questions have been raised regarding the renewal of the Lomé Convention, among others. The future of trade in rice and sugar is of primary concern. In addition, there are issues of market access for non-traditional products, border protection for domestic food production and other issues central to trade such as the environment and food security.
Given the favourable aspects of the status quo, Guyana will undoubtedly negotiate as a minimum to keep and extend the current trading conditions. This position was made clear at the 5th ACP Special Ministerial Conference on sugar, held in Fiji in June 1998. A subsequent report to the Cabinet reiterated some of these positions:
The position set out above reflects the recognition by ACP countries in general that they will be under pressure to reduce sugar prices, especially in their preferential markets, and to introduce changes within a relatively short time designed to make their sugar industries more competitive. Guyana, as the leading sugar producer in CARICOM and the second largest supplier of sugar to EU, also recognizes the fact that it has to be effective in the role of a leader in influencing the WTO process which will be shaping trade issues in the future.
Guyana's immediate responsibilities in respect of future trading arrangements for sugar are twofold. First, it must ensure that its positions on sugar are well articulated and argued, and that it contributes to ACP having a strong representation in the WTO negotiating process. Second, it must set up formal mechanisms to ensure that the opportunities for productivity-enhancing changes within the sugar sector are identified and that the necessary steps are taken so that the sugar industry is ready for transition if and when the market arrangements change.
The impact of WTO rules for trade in rice is potentially greater than for sugar given the less robust legal framework underpinning the existing preferences. Changes in the way rice is purchased - the new licensing system - are only one indication of the changing market access. As stated in Section III above, millers feel that the new system puts undue pressure on them to deliver during a very short period given the growing season in Guyana and the licensing schedule in Europe, with Guyana not being able to export the full quota allocated. Guyana has been a key participant in developing a strategy for ACP rice-exporting countries and as a result ACP concerns in the WTO process and a post-Lomé arrangement mirror those of Guyana. The main issues included in a call for a "Rice Protocol for ACP rice in a post-Lomé arrangement" are as follows:
Estimates by the New Guyana Marketing Corporation (NGMC) suggest that Guyana's current exports of fruit and vegetables are only about 10 percent of the potential. The constraints identified do not relate directly to WTO measures although the time for adjustment to become efficient exporters may be considerably limited given the opening of the domestic market. Exporters constantly face problems with shipments due to unreliable aircraft space. Improved sea transportation (for fruit and vegetable produce), given its greater competitiveness relative to air transport, needs to be investigated.
Tariff protection for the domestic packaging industry has been identified as limiting exports. Because of the higher costs of packaging materials than in competing CARICOM countries, shippers reuse packaging materials too often and suffer higher post-harvest problems. The NGMC has called for duty-free imports of packing material for exports.
The position and needs of Guyana on these issues are closely aligned to those of its CARICOM and ACP partners. Therefore, greater cohesion within these bodies for bargaining purposes needs to be assured. How the next Lomé is negotiated in the new WTO environment, and specifically how rice and sugar are treated, is of paramount importance to Guyana. While the role that the WTO will play in shaping the future trading environment is critical, it is no less important that each trade agreement be respected as a component of the overall trading system. Further, trade liberalization should be applied to the sectors that are ready to benefit from liberalization, carefully identified and targeted. Beyond this general stance, positions can be put forward in the areas of market access, domestic support, non-tariff measures and safeguard options, along the following lines:
Market access: Where high tariffs and a lack of transparency in the administration of TRQs limit opportunities in developed country markets, tariffs should be lowered and the administration of the quotas made transparent. This position is modified where tariffs may be linked to the provision of preferential access.
With respect to the domestic market, a commitment to the reduction of tariffs over the long run should be considered, but current tariff levels should be allowed in the meantime, given the limited ability to use alternative means of safeguards, mainly for security and socio-economic purposes. There is the related expectation that the large gap between bound and applied tariffs be maintained to preserve options.
Domestic support: The concessions to developing countries under the current Agreement should be maintained as transition to more efficient agricultural economies and the development of new markets are achieved. Since changes in current export market preferences are up for negotiation, the question of compensation for loss of market access should also be discussed. Such compensation should take the form of an Agricultural Modernization and Diversification Fund that is tightly linked to green box policies. Assistance of this nature is critical to gaining access to new markets and to increased diversification and product differentiation.
Non-tariff barriers and safeguard options: There is concern that SPS measures are being applied in ways that restrict trade and not exclusively for animal and health protection. Thus there is need for a consolidation of standards and to put in place a system that operates fairly to all parties. The feeble capacity of developing countries to institute and implement safeguard measures is well recognized but still needs to be addressed. Assistance in building institutional capacity for both compliance and complaint is needed. It is particularly important for food security, in terms of both the quality and the volume of imports, and specifically its effects on human health and the domestic production sector.
1 Based on a background study prepared for the FAO Commodities and Trade Division by J. R. Deep Ford, Guyana.
2 The first paragraph of Article 1 of the Protocol reads: "The Community undertakes for an indefinite period to purchase and import, at guaranteed prices, specific quantities of cane sugar, raw and white, which originate in the ACP States and which these States undertake to deliver to it."
3 "Food" as defined in this subsection excludes fishery products.
4 This may explain the decline in imports since 1992 onwards (though there was a rise again in 1998).
