Existing arrangements within SACU should
continuously be reevaluated as to their usefulness, not only for the Swazi
sugar industry but also for the Swaziland economy as a whole. This includes the
EU-South Africa Trade Development and Cooperation (TDCA) Agreement, under which
sugar-containing food products imported duty-free from the EU may displace
similar products made in Swaziland in the SACU market.
In
this regard, an extension of the TDCA provisions to the entire SACU area,
modified where necessary to include the development of regional demand for
regionally produced sugar, is possible. There is also a need to maintain (and
where possible expand) preferential access to regional markets and preserve the
value of both the domestic (SACU) and regional markets.
Measures
Even
though sales in regional markets do not yield prices much above the world
market, those sales generally provide the opportunity for value-added sales,
given that the sugar is shipped in bagged or even in packaged form. Regional
markets provide an opportunity to place Swazi sugar at markets marginally
better than the world market.
The
most important policy here is to push for more preferential access in regional
markets and promote the development of regional integration measures that will
ensure regional markets are of value. Preferential market access in COMESA is
presently provided through a derogation which is renewed annually. This
extension is now not prospected to be renewed this year, and therefore a need
to find a more sustainable trade arrangement with countries in the COMESA
region. The integration of SACU within the SADC trade agenda should also be
undertaken cautiously, ensuring that the interests of Swaziland, particularly
with regard to sugar, continue to be preserved.
The
nature of demand in regional markets, requires a specific packaging and bagging
system. There is need to develop this system, as more sugar will have to be
sold into this market, and the world market which requires bagged sugar, as
opposed to bulk sales.
The
EU market will continue to be a high premium market into the future. There is
need to maximise benfit from preferential access into this market, whilst also
seeking more access which will be commensurate to compensate the reduction in
income losses resulting from the reforms. Swaziland should continue seeking
immediate expansion of duty free access to the EU market, the main priority in
2006 being to avoid the loss of some 20% of the current duty free access to the
EU market enjoyed by Swaziland through the SPS. If this cut in duty free access
can be avoided, income losses on sales of sugar to the EU market will be
limited.
The
prevailing surge in world prices can provide temporary relief to the impact of
a lower EU price on the industry revenue. However such surge cannot be used on
a sustainable basis to maintain the viability of the sector and to help
smallholder growers who are in conditions of bankruptcy. Such a marketing
strategy would therefore only be temporary. Such cannot by any measure reduce
the need for the additional access to the EU.
Overall therefore, it is vital that the EU is implored to
avoid any reduction in Swaziland’s duty free access and that it rapidly moves
towards providing certainty on the commitment and future level of expanded duty
free access to be granted Swazi sugar exports from 2008 onwards.
The
need to strengthen and nurture the regional SACU market is even more important
now. The EU, and other partners, need to support the protection of Swaziland’s
interests under the EU-RSA TDCA.