Between protectionism, poverty orientation, and market efficiency: reform of the EU sugar market organisation

The paper examines impacts of the reform of the European sugar market regime, arguing that the reform will have substantial impacts on developing countries and will also be of highly symbolic value for the ongoing liberalisation of the agricultural policies of industrialised countries.

The article highlights that:

• the reform of the European sugar market organisation (SMO), which has until now been exempt from the general restructuring of the EU Common Agricultural Policy, must be seen as an important building block in the project of liberalising the international agricultural markets
• while the reform will have substantial impacts on developing countries, it is, however, not as radical as it is often made out to be: Its principle aim is to cut subsidized exports by lowering administrative prices; and some other important elements of the existing market regime will continue in place, including production quotas and heavily restricted market access
• without tariff protection, no more than a small proportion of the EU’s sugar production would be likely to survive for long, and most of the EU’s demand for sugar would be covered by a number of larger, competitive developing countries
• under the current reform not all developing countries will turn out to be winners
• the decline in prices it en-tails will substantially curtail the exports and export chances of some developing countries that presently enjoy preferential access to the EU market
• it is essential to provide compensation for these losers of the reform – for one thing to cushion negative impacts, but for another to avoid the impression that agricultural liberalisation is a factor that contributes to exacerbating poverty
• the EU should mobilise the funds needed to compensate these countries.

[adapted from author]