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GTAP Resource #4753

"Economic Impacts of Elimination of EU Sugar Production Quota on ACP Countries"
by Khorana, Sangeeta, Manitra A. Rakotoarisoa and Badri Narayanan


Abstract
Background: Since the 2006 EU Common Agricultural Policy (CAP) reforms, which included a new sugar regime to end EU production quota and reference price for EU beet sugar in 2017 (European Commission 2010), it is likely that the EU will move from being a net importer of sugar to a net sugar exporter. So far, developing and least developed countries from the African, Caribbean and Pacific Group of States (ACP), including Malawi, Zimbabwe, Lesotho and Swaziland have benefited from the export of raw sugar to the EU market. Currently the EU imports approximately 60 per cent of their demand for cane sugar from the ACP countries under the duty-free quota-free access sugar from these countries have to the EU market. Recent work by the European Commission (EC) shows that the reform of the EU sugar regime could lead to a 4.2 per cent increase in EU production of beet sugar, while imports of sugar are estimated to decline by 42.6 per cent, mainly due to the replacement of imports from high-cost third countries, like the ACP countries, by domestic production. In volume terms, this implies that EU sugar imports will decline from 3.5 million tons in 2012 to 1.5 million tons in 2022.

Existing literature:Studies by Nolte et al (2010a, 2010b, 2012) analyze sugar quotas abolition report that competition inside the EU will intensify and protection against import from the world market will continue to exist. The studies also suggest that current out-of-quota production will be redirected to the food market. At the same time, efficient producers might increase their production. Both will put internal prices under pressure and drive less competitive EU producers as well as preferential importers out of the market. Despite an increase of internal production, the total revenue of the EU sugar industry will most likely fall. The size of these effects is not clear a priori. Depending on the world market price the EU could stay an importer or become an exporter again. Studies report t...


Resource Details (Export Citation) GTAP Keywords
Category: Other CGE Application
Status: Not published
By/In:
Date: 2015
Version: 1
Created: Khorana, S. (4/15/2015)
Updated: Batta, G. (4/15/2015)
Visits: 910
- Calibration and parameter estimation
- Agricultural policies
- Preferential trading arrangements
- European Union


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