Sugar Transhipment

Sugar Transhipment.

For years we in Anguilla have been puzzled and curious as to how we became a sugar exporting country. I have made a number of posts on the subject. Now, Paul Sjiem Fat, the CEO of Anguilla Capital Corporation has responded with detailed information that I am happy to publish as a guest editorial. He calls it:

OCT-EU Preferential Sugar Trade: With regard to the end of the processed sugar exports from Anguilla, please note that the EU did not "put a stop" to any sugar trade between the EU and its Overseas Countries and Territories. In fact, the yearly OCT sugar quota is alive and well and the 28.000 metric ton overall OCT allotment will continue in its present form until the end of 2008 at which point it will be gradually reduced by 7.000 metric tons per year until 2011.

What did happen, however, was the following. A complaint against the EU was filed in the arbitration tribunal of the World Trade Organization (WTO) by Brazil and a few other countries about four years ago. This complaint stated that due to the very high sugar subsidies in the EU combined with unusually high import tariffs, third country sugar producers were being unfairly "locked out" of the EU's sugar markets.

Two years ago the WTO's arbitration tribunal ruled in favor of the parties that filed the original complaint (Brazil et al) and the EU was given a period of two years to dismantle its long standing subsidized sugar market regime. The OCT sugar processing trade had since its inception been an "arbitrage" game.

OCT based companies such as Anguilla Capital Corporation in Anguilla and others in Aruba and Curacao, sourced sugar at a low price in the global market and then shipped it to an OCT in order to subsequently ship to the EU (after nominal processing -- 'grinding, milling etc') and still make a decent return on their capital employed.

In accordance with the WTO's ruling the first thing that the EU did in order to dismantle its long standing subsidized sugar regime was forcibly lower their internal market prices. This, of course, created an "uneconomic" scenario for most, if not all, of the OCT based sugar processing export firms. In addition, another long standing agreement with the so called ACP group of countries involving raw sugar (not white refined as in our case) was also not renewed.

Mind you that of all the ACP countries that shipped raw sugar to the EU under a yearly quota, few if any had any natural competitive advantages in producing this sugar quota. For instance, you know St. Kitts better than me, and the mere fact that the island would have to import manpower from Guyana in order to harvest their cane crop shows how "unnatural" this arrangement was to begin with.

So, in short, the EU did not "stop" the OCT-EU processed sugar export trade at all. Rather, under irrevocable orders from the WTO the EU's internal sugar market prices were cut by almost 50% in less than eighteen months which in effect rendered the entire trade "uneconomical" in all of the OCT's. And, to add insult to injury, for the past thirty years world sugar prices (i.e., our 'raw material price') had been at historical lows (at times as low as US$ 175.-- per metric ton of white refined sugar). However, due to the fact that global energy prices increased by as much as they did over the past 24-30 months the viability of cane derived ethanol all of a sudden increased world market sugar prices by more than 200% which, in effect, was the last nail in the coffin that ended this trade in "all of the EU's OCT's."

Sugar Transhipment

Guest Editorial: Sugar Transhipment 2.

In a recent issue of the Light Newspaper, Teacher George published a story about the sugar flow from the shell factory having ceased. We have all in Anguilla contemplated with some amusement and not a little amazement the very idea that Anguilla could be a sugar exporter to Europe, when even St Kitts has lost its market there. I have received a couple of comments by email. I published one a few days ago as a guest editorial. Today, I publish another one:

The way things often happen in Anguilla, Paul Sjiem Fat's container traffic will be way down, Teacher George will make a comment like, "Is it true that the EU has stopped the sugar transhipment?" and Eddie will get up in the House and say he heard the EU has stopped the sugar transhipment. So I haven't paid much attention to these stories until today, when I was able to confirm that, indeed, there is some kind of problem.

Several years ago the shell factory was surrounded by countless police, who then raided the place. Sjiem Fat had hired a couple of young men who had been in trouble with the law, and the police were looking for evidence. They found nothing.

Some time thereafter there was a raid on Sjiem Fat's office, which is upstairs the Fair Play Complex. They were looking for evidence of money laundering on the part of Sjiem Fat's mysterious Israeli partner. It would be interesting to learn what the outcome was. It may be related to Sjiem Fat's current problem, whatever that may be.

Sugar Transhipment

Guest Editorial: Sugar Transhipment.

As everyone in Anguilla knows, we are now a major player in the sugar trade. Anguilla, which has not had a cane field for over one hundred years, is exporting sugar to Europe. The idiocy of it all is so stunning that we have sat looking on in utter amazement. The following story was sent to me by a guest editor. I could not refrain from publishing it:

On page 3 of the 9 March "Light Newspaper" there is a story about transhipment.

Any article which attempts to discuss aluminium and sugar transhipment as a common "device" is going to contain errors. There are several basic and important differences.

We do not know why the sugar volume is down. It is important to recall that the trade is seasonal. Also, Anguilla has a small quota that we can't exceed.

There is no duty on products which originate in the OTs and are shipped to the EU. The reason sugar needs to be processed is to qualify it as an Anguillian product. The rules are well defined; it is not enough to simply re-package the sugar.

Aluminium (and motor vehicles) falls under completely different transhipment rules. These commodities are limited to manufactured products, and exclude sugar, rice and agricultural products. Aluminium is manufactured from bauxite; unprocessed raw materials such as bauxite and other ores are excluded, since they are not "manufactured."

The EU duty on aluminium is 6%. When transhipped through an OT, duty must be paid in the OT at a rate no less than that normally payable in the EU. George must be mistaken about Anguilla offering a cut rate on duty.

Anguilla has never transhipped rice. Montserrat did, before their facility was destroyed by the volcano. It has not been thought profitable to replace the factory, or to engage in similar activity in Anguilla.

Recent Issues in Discussion

The More Interesting Recent Issues in Discussion:

1. “Callaloo Resort”. Were the planning laws of Anguilla infringed in its construction? Who had a hand in it?

2. “Road Paving Contracts”. What is the evidence that there is a cartel in operation? How does it operate?

3. “Postage Paid” stamp. What oversight is there in its operation at the Post Office?

4. The “Trans-shipment Project”. Who else has the evidence?

5. The “Airport Project”. The award of contracts and licences?

6. “Altamar”. Is there Russian money involved?