econometric estimates. We then include such a specification in a GE model including a detailed
representation of the sugar sector.
Our simulations suggest that the 2005 reform of the EU sugar sector will lead to the end of C sugar
exports, and that the fall in prices will provide significant degree of freedom for coping with the need
to reduce significantly the EU sugar tariffs under the WTO negotiations. The reform should also make
it possible to cope with short run constraints imposed by the WTO panel such as the cut of refunds by
an amount corresponding to the sum of ACP sugar imports and the C sugar. The losses for sugar beet
producers and processors will be significant, although they are partially compensated. The reform
should also result in savings for taxpayers and consumers. Overall, the reform should result in a
higher welfare for the EU15, even though cheaper sugar might raises some public health issues that
are not accounted for in the model. However, our simulations suggest that the 2005 reform is not
sufficient to address longer term commitments such as a complete elimination of export subsidies. It
is difficult to predict future world prices for sugar, in particular given the possible development of non
food use of sugar cane and beets. However, it is likely that the extra pressure added by preferential
imports under the EBA will make larger cuts in EU prices or/and in production quotas necessary.
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