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Abstract

This report analyses the impacts of the Commission's July 2004 proposal for sugar policy reforms on developing countries. The study uses three approaches that complement each other: model simulations, literature review and country case studies. Model simulations indicate that the consequences of the EU policy reform on EU imports are rather modest: imports from LDCs increase but to a lesser extent than the Commission and other studies indicate. Important trigger points in the evaluation of the impact on trade flows are the degree of substitutability between domestic EU sugar and imported sugar, and potential 'swap' or trade diversion effects. Welfare effects are minor to ACP countries as a group, but country effects may differ strongly. The study includes three case studies - Ethiopia, Mauritius and Brazil, representing an EBA, an ACP and a net exporting country with no preferences to the EU market - to show how EU policy changes may affect the sugar industry in each of these countries.

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