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Who Gains from Sugar Quotas?

Research reports

Pressure to change current preference agreements between developed and developing countries is increasing.  Recent WTO negotiations and the EU’s Everything But Arms (EBA) Agreement are expected to result in a complete phase out of the EU’s ACP Sugar Protocol, one of the longest standing and highest preference margin granting agreements (Williams and Ruffer 2003).  Similarly, the US scheme is under comparable pressure.  

The two most pressing reasons for addressing the negative impacts of preference erosion are: 1) developmental issues including job losses and likely increase of poverty; 2) resolving what may become an impasse for WTO trade negotiations (Williams and Ruffer 2003).  

Numerous proposals for helping affected countries deal with the impact of preference erosion have been suggested to policymakers.  However, the extent to which preference erosion will affect current preference beneficiaries remains unclear, making it difficult to assess appropriate policy interventions.

The focus of this research report has been to gain, as far as possible, an understanding of who is currently benefiting from preferential access, not just in terms of which countries but wherever possible, which parties.  The following research questions have guided the mix of

policy and quantitative analysis in the following pages:  

  •  What is the ownership and, if possible, employment structure of sugar production in the countries with quotas, especially the poorest countries?  
  •  What is the share of income accruing to the country (including tax revenue) and the share going abroad?
  •  Which countries could expand production significantly in the absence of quotas, and which would lose; what would be the ownership structure and division of income?  
  •  How well does the industry lobby group, the London sugar group, reflect the interests of the various sugar companies, sugar countries, and other interest groups?
Benjamin Garside, Thomas Hills, José Carlos Marques, Carolin Seeger & Veronika Thiel