increase (over 2000-02 levels) in total ACP exports under all preferential regimes of just over
1 million tonnes by 2010 (as against the Commission’s forecast of 1.6 million tonnes by
2012). The alternative assumption is that non-LDC suppliers are limited to their current
quotas (i.e. that Protocol quotas can be reallocated between signatories but only LDCs have
unlimited access outside the Protocol). In this case the forecast increase in exports is only
78,543 tonnes. These figures imply total EU imports between a high of 3.1 million tonnes
(assuming no change to the Commission’s estimates for supplies from the Balkans and under
MFN), and a low of 1.7 million tonnes (just 5 percent higher than in 2000-02).
As the actual cut in prices is slightly less severe than assumed, import levels may be
somewhat higher, but it still seems likely that the effect of sugar ‘reform’ will be lower
imports than would otherwise have occurred. At the high end these figures suggest that
imports will be 2.1 million tonnes lower in 2012/13 than the 5.2 million tonnes forecast by
the Commission in the absence of CAP change.13 At the other end of the scale they would be
3.5 million tonnes lower.
EU consumers will tend to benefit from lower prices. However, the cuts will be offset (to the
extent of over 60%) by increases in the single farm payment. This, in turn, will mean a
combination of higher taxes than would otherwise have occurred and a redirection of
expenditure away from non-sugar uses.14
Distribution of effects
Although there will be no increase in imports from non-preferential suppliers, some
preference recipients will see their exports grow. Although the aggregate growth will be less
than forecast in the absence of the sugar policy change, it is possible that some non-LDC
ACP states could achieve higher growth (through reallocated Protocol quotas) than they
could otherwise have expected. Indeed, it will be the distributional changes arising from the
reduction in the internal market price will be the most significant.
The impact on individual countries will vary, depending on:
♦ the regime(s) under which they export to the EU market;
♦ the extent to which the regimes allow exports to increase;
♦ their underlying costs of production;
♦ the relative importance of sugar for their economy.
The effect of the changes on the proportion of the final price received by the exporting state
will depend on what happens to the Sugar Protocol and SPS. If the post-2007 Cotonou regime
allows non-LDC Protocol beneficiaries to export unlimited quantities those countries with
low production costs will be able to increase their exports. If the regime also offers a
guaranteed price, the reduction in their revenue per unit exported may be smaller than if they
have to sell at whatever the market will bear. For LDCs much will depend on whether they
continue to sell at an administered price or if there is a free for all. Given that quotas have
13 CEC 2005b: Table 4.
14
The choice between lower taxes or redirected expenditure is predetermined to 2013 by decisions already taken - but it
will become a practical option (as well as an analytical one) after the expiry of the EU Financial Perspective 2007-2013
agreed in December 2005 - or before then if further CAP reform is brought forward. Given that the total expenditure on
CAP Pillar 1 expenditure is now fixed to 2013 this implies a redirection of expenditure away from non-sugar enterprises.
15