COFFEE OR TEA WITH SUGAR?!

In order to obtain political mileage from the sugar subsidy scheme we could have easily announced it prior to the MEP elections on June 12th, but we opted not to until all discussions were finalised and the scheme was ready for implementation. This reflects the transparent process we carried out in the best interest of industry and consumers alike.

by Censu Galea

The sugar issue has been one of the political highlights during the past few months and particularly weeks. The subsidy scheme negotiated by Government and put into implementation in the past few days is yet another achievement we have made together with the collaboration of the Federation of Industry, Chamber of Commerce and GRTU, which I thank for the discussions we had together prior to the launch and implementation of this scheme.

Before joining the European Union on the first of May, Malta bought sugar at global prices, lower than those of the Union. Following membership Malta had to apply EU prices and therefore, as a result of the common external tariff, all sugar bought from outside the EU is bought at a higher price. In the case of sugar bought from within the EU, exporters from other member states to Malta would no longer benefit from export refund and therefore in theory would have to charge the Maltese importer the higher EU price.

With this in mind, in order to pre-ampt against this increase in prices, it was agreed during the process of negotiations with the EU that a state-aid mechanism be introduced. The scheme will run until 2010 by which year EU and international market prices are expected to converge.

On behalf of Government, I have briefed members of the press a few days ago on the modus operandi of this scheme and how it will be implemented. This follows weeks of healthy discussion with the sectoral players involved complimented by the constituted bodies.

The maximum amount of aid possible as stipulated in the Treaty is spread over a maximum period of seven years allocating 11 million Euros for the remaining months of this calendar year and then followed by 10.5 million for 2005, 9.9 million for 206, 7.9 million for 2007, 5.9 million for 2008, 4 million for 2009 and 2 million for 2010. This encompasses a total of 51.2 million Euros spread over a period of seven years.

The total available for 2004 shall be pro-rata as from the date of accession and the total amount qualifying for subsidy shall not exceed 35,000 tons per annum. Therefore this aid shall be applied digressively 100% in 2004, 95% in 2005, 90% in 2006. It will then be reduced by 18% per annum for the period 2007 - 2010.

The scheme will be launched to favour importers of sugar who import and sell their product within Malta, the EU or third world countries. With this in mind the first category qualifies those selling the imported sugar in the domestic market without further processing on their part with the end buyer located in Malta, and domestic processors who import sugar directly, use it as an input and sell the processed product in the domestic market. The second category caters for domestic processors who purchase sugar for the local market, use it as an input and sell the processed product in EU countries and domestic processors who import sugar directly, use it as an input, and sell the processed product in EU countries. The third category is for domestic processors who purchase sugar from the local market, use it as an input and sell the processed product in non-EU countries or domestic processors who import sugar directly, use it as an input, and sell the processed product in non-EU countries.

All traditional applicants will be granted subsidy based on trade flows for the past 3 years and a 10% of the allocation will be reserved for new entrants.

The main exponents among those who continuously criticise the present Government’s operations have unleashed several passionate attacks on various issues of paramount importance to the country’s well-being. One of these is the economy. We agree that it is in our interest to strengthen our economy, enhancing in turn our level of competitiveness and as a main starting point to this, reducing our country’s national deficit to acceptable proportions.

This is one of our main priorities. We have already started addressing the situation with all possible means, and are on the right track for reaching our predicted targets. It is not of a vital interest to the nation though, to embark on unfounded attacks merely to gain cheap political mileage and therefore instil a new sentiment within the electorate which would completely be the opposite of what is actually in place.

The Opposition has repeatedly unleashed attacks at the pension reform, but is yet refusing to join the discussion on the issue; it has continuously mentioned the rates of unemployment when it had so well increased the number to record heights when in government; it had told the people that prices would go sky high following EU membership, and then said that some went down and others up….a far reaching difference between what they preach and actually do.

A case in point is the Opposition’s repeated allegations that following the 12th June, the day when we voted to elect our five representatives to the European Parliament, the price of sugar would dramatically increase. This was yet again a process negotiated with the EU, during which process, again, the Opposition refused to participate. Malta had indeed negotiated, and now is ready to implement a subsidy scheme on sugar, in order to keep its market price at present levels.

I could have very easily announced this scheme prior to the MEP elections on June 12. It could have been a good platform to benefit from some political exposure. However we decided not to until the discussions with all those concerned were concluded and the scheme was ready for implementation. This reflects the transparent process we carried out in the best interest of industry and the consumers themselves.

Now is the time to weigh the truth, between those who criticise government on all fronts of our national agenda, but yet detach themselves from fora where they can present their concerns and concrete alternatives, and Government who has a clear set target in mind, and no matter what, has to achieve.

Just a short note about the recent MEP and local council elections. The electorate has sent a message, which as already stated by the Prime Minister and my other colleagues, we are analysing in order to identify where we can improve or explain better. This apart, I wish well to all the five newly elected MEPs and hope that the responsibility they have been entrusted with will bring about an added voice for the common interests of the country.

Hon. Censu Galea is Minister for Competitiveness and Communications