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Coping with the Fallout for Preference Receiving Countries from the EU Sugar Reform

Hannah Chaplin and Alan Matthews

Developing countries can produce sugar at much lower cost than in the EU, yet reform of the EU sugar policy will result in both winners and losers among them. This is because the EU is both an exporter and importer of sugar. Sugar policy reform will mean a reduction in EU sugar production, benefiting competitive sugar exporters such as Brazil. But sugar policy reform will adversely affect those developing countries which currently benefit from preferential import access to the EU’s high-priced sugar market, while diminishing the benefits of those least developed countries to which duty-free and quota-free access has been promised after July 2009. This paper concentrates on the latter group of preference-receiving countries. It identifies the countries concerned and the extent of their potential losses. It critiques alternative proposals which have been put forward to assist these countries to adjust to the adverse effects of EU sugar policy reform. The paper concludes by proposing a modified package of measures to offset the negative effects of EU sugar policy reform on preference-receiving countries.

JEL: F10, Q18
Key words: EU sugar policy, preference erosion, compensation

Last updated 28 August 2014 by IIIS (Email).