An Update on the Consequences of EU Sugar Reform

Abstract

Since its formation the European Union (EU) has employed a rather complicated policy to ensure high prices to domestic sugar growers and trade preferences to certain sugar exporting countries, e.g. the African Caribbean and Pacific (ACP) group. One result of this policy is that the EU has been both the second largest importer and second largest exporter in the world market. Under pressure from the World Trade Organization (WTO), the EU agreed to reform its policies toward sugar in 2001, with the full effect of the reforms being fully implemented in 2006. In this paper, the impact of the sugar reform on EU production, consumption, imports, and exports is examined especially with regard to how it all affects the ACP countries who receive preferential treatment regarding access to EU sugar markets. Preliminary analysis indicates that lowering domestic EU prices, while quotas requirements for ACP countries remain intact might have negative revenue implications for poor sugar producers.