How Would a Trade Deal on Sugar Affect Exporting and Importing Countries?
Center for Agricultural and Rural Development
In December 2008, the former chairperson of the agriculture negotiations of the World Trade Organization (WTO), Ambassador Crawford Falconer, presented the latest version of the draft modalities. The aim is to increase market access, reduce domestic support and eliminate export subsidies in agriculture. There is interest on the implications of the proposed modalities on agricultural trade in general and on specific product markets such as sugar in particular. This paper explores the implications on sugar markets in terms of the reductions in tariffs, domestic support and export subsidies as well as the treatment of sugar as a sensitive, preference erosion and tropical product. The preference erosion resulting from the EU sugar reforms is also examined. An international sugar model is used to run two scenarios analysing first the impact of the cuts in bound tariffs on major sugar exporting and importing WTO Member countries and then the impact of treating sugar as a tropical product. The results are compared to a baseline scenario.