Reforming the European Union Sugar Program: What Are the Market and Trade Implications?

The European Union sugar policies, in place for over 49 years, underwent a first major reform in 2005, yielding to mounting pressures coming from the EU 2004 enlargement, the recent EBA initiative to least developed countries and the recent WTO-panel ruling on EU sugar export subsidies. The reform package consists of lowering administrative prices as well as modifying the structure of production quotas leading to lower sugar production and bringing down subsidized export to within WTO limits. However, these reforms do not address other components of the EU sugar policies such as non-preferential tariffs, quota reallocation across regions, or opening up the competitive structure of the EU sugar industry. This makes it difficult to assess the economic and trade implications of the reform package. This paper offers a dual-modeling approach to examine the impact of the EU sugar policy reform on sugar production and prices in the EU, and the trade implications for third countries with particular distinction between preferential and non-preferential exporters.International Relations/Trade,

HOW SIGNIFICANT ARE EXPORT SUBSIDIES TO AGRICULTURAL TRADE? TRADE AND WELFARE IMPLICATIONS OF GLOBAL REFORMS

We analyze the impacts of removing export subsidies with or without reforms to domestic support and tariffs using a multi-country trade model. Model simulations are designed to assess both the magnitude and the direction of trade in the absence of export subsidies in connection with other domestic distortions and import barriers. Results show that the impacts of export subsidy removal, while significant for some countries and products, are comparatively smaller and are dominated by the much larger trade and welfare distortions imposed by import barriers. Hence, the removal of domestic subsidies, including export subsidies, by themselves may not be sufficient to improve global welfare and expand trade since the welfare gains by the net exporters are far outweighed by the losses of net importers. One implication from these simulations is that export subsidy reform must be combined with market access liberalization in order to benefit exporters and importers and to attract the widest support among WTO members.International Relations/Trade,

PRICE BEHAVIOR IN CORN MARKET WITH IDENTITY PRESERVED TYPES

This study examines the price behavior for identity preserved and generic corn under different demand and competition conditions. Simulation results suggest that generic corn has a greater market impact on specialty corn than the reverse, and that increased competition within processing may improve price premia received by corn growers.Demand and Price Analysis,

The EU Sugar Policy Regime and Implications of Reform

The European Union’s sugar policy, in place since 1968, underwent its first major reform in 2005 in response to mounting and unsustainable imbalances in supply and demand. The reform, however, targeted only a few policy instruments (intervention price cut, voluntary production quota buyout, and restrictions on nonquota sugar exports), while leaving other key policies unchanged (interstate quota trading, sugar-substitute competition, and import barriers). Consequently, the extent of the reform’s impact is limited, compared with more far-reaching alternatives, particularly when the oligopolistic nature of the industry and its noncompetitive pricing behavior are taken into account. A model-based analysis suggests that the reforms by themselves are unlikely to induce price adjustments sufficient to reduce overproduction unless quotas and/or high tariffs are reduced.European Union, EU, sugar CMO, Common Market Organization, policy reform, trade, economic model, Agricultural and Food Policy, International Relations/Trade,

Are we willing to give what it takes? Willingness to pay for climate change adaptation in developing countries

Climate change adaptation is gaining traction as a necessary policy alongside mitigation, particularly for developing countries, many of which lack the resources to adapt. However, funding for developing country adaptation remains woefully inadequate. This paper identifies the burden of responsibility that individuals in the UK are willing to incur in support of adaptation projects in developing countries. Results from a nationally representative survey indicate that UK residents are willing to contribute £27 per year (or a median of £6 per year) towards developing country adaptation (US$30 and$7 using the World Bank’s purchasing power conversion factors). This represents less than one third of the back-of-the-envelope $100-140 per capita per year that the authors estimate would be needed to raise the$70-100bn per year recommended by the World Bank to fund developing country adaptation. Regressions indicate that WTP is driven mostly by a combination of beliefs and perceptions about one’s own knowledge levels, rather than actual knowledge of climate change. We conclude that, to engage the many different audiences that make up the ‘public’, communication efforts must move beyond the simple provision of information and instead, connect with people’s existing values and beliefs

AGRICULTURAL POLICY REFORM IN THE WTO: THE ROAD AHEAD

Agricultural trade barriers and producer subsidies inflict real costs, both on the countries that use these policies and on their trade partners. Trade barriers lower demand for trade partners' products, domestic subsidies can induce an oversupply of agricultural products which depresses world prices, and export subsidies create increased competition for producers in other countries. Eliminating global agricultural policy distortions would result in an annual world welfare gain of $56 billion. High protection for agricultural commodities in the form of tariffs continues to be the major factor restricting world trade. In 2000, World Trade Organization (WTO) members continued global negotiations on agricultural policy reform. To help policymakers and others realize what is at stake in the global agricultural negotiations, this report quantifies the costs of global agricultural distortions and the potential benefits of their full elimination. It also analyzes the effects on U.S. and world agriculture if only partial reform is achieved in liberalizing tariffs, tariff-rate quotas (limits on imported goods), domestic support, and export subsidies.Agricultural and Food Policy, International Relations/Trade,