Preferential access under the EU’s Sugar and Banana Protocols has afforded large income transfers to a number of ACP countries. These transfers will be reduced under proposed reforms to the EU’s sugar and banana markets which have had to respond to a number of internal and external pressures. Reducing preferences for sugar and banana exports from ACP Protocol countries will have beneficial effects on development and poverty reduction in other major producing countries which are not party to these agreements. However, losses for some Caribbean ACP suppliers will be high as higher production costs mean that these countries and regions can only sell profitably to a protected market.

Our study identifies a number of options for an effective EU transitional assistance package to support sugar- and banana- dependent ACP countries. As part of this, we propose the creation of a dedicated preference erosion scheme to finance investments supporting industry restructuring and export diversification. The scheme would need to be predictable in order to encourage investment and to avoid strict conditionality to quicken disbursements.