о increased imports from the former;
о a need/willingness to shift value-adding processes to the producing state.
Because the distributional possibilities for any given absolute level of rent are so wide
ranging, changes to the architecture of a regime may produce effects as (or more) profound
than those resulting from changes to conditions 1 and 2. It is insufficient, therefore, to
consider changes to protectionist regimes only in terms of whether or not they reduce excess
supply. As explained below, it is possible to envisage situations in which measures to reduce
excess supply in a protected domestic market have external effects that are the opposite of the
ones normally expected from liberalisation.
The case of sugar
The EU regime of sugar protection and preferences not only scores high on conditions 1 and
2 but also provides different preferential regimes, each with their own architecture, that result
in different distribution patterns for the rent. The EU’s import tariffs are between €339 and
€419 per tonne (equivalent to an ad valorem tariff of 108-133 percent) which is sufficient to
exclude most non-preferential imports.1 Moreover, preference beneficiaries include states
with the range of supply characteristics noted above. There are those for which volume
constraints are irrelevant as they could not increase supply at the prices available (with the
high-price Caribbean sugar producers as the main examples). Others could increase supply
were volume restrictions lifted (notably the Southern African preference recipients). And in
others the situation is uncertain in that volumes might be increased but only on certain
assumptions about future productivity gains and price levels.
In the sugar case, the losers from EU protection/preference include the Philippines, Cuba and
especially Brazil. Not only do they gain no advantage from the high EU prices (because they
cannot export to Europe) but they also face lower world prices as a result both of surplus EU
exports and of the perpetuation of uncompetitive production, inter alia in the Caribbean.
There are five main avenues for sugar imports to enter the EU, four of which are preferential,
and in addition there are cane supplies from the OCT which, whilst technically not imports,
are nonetheless very different from the beet sourced in the core of Europe.2 Three of the
regimes cover developing countries; the other two relate to 0.3 million tonnes of sugar which
is imported preferentially from the Western Balkans under the Stabilisation and Association
process and an MFN tariff quota for Finland that pre-dates its entry into the EU.
The Sugar Protocol
The longest-standing regime is the EU-ACP Sugar Protocol which provides a tariff quota of
1.3 million tonnes to a sub-group of the African, Caribbean and Pacific (ACP) states (plus
India). The architecture of the Sugar Protocol has provided the most extreme example of
condition 3. Under the Protocol the EU guarantees to purchase ACP sugar at a price
‘negotiated annually’ that is within the ‘range obtained in the Community’.
1
The tariffs given are for raw cane sugar (Combined Nomenclature - CN - codes 17011110 and 17011190) The ad
valorem equivalents are those given in UNCTAD’s Trade Analysis and Information System, which were calculated using
2001 data.
2
See Chaplin and Matthews 2005 for more detail on these regimes.