A DETERMINATION OF FACTORS INFLUENCING SUGAR TRADE

Abstract

A variety of factors influence U.S. sugar imports. Although the U.S. tariff-rate import quota restricts trade, other factors also influence sugar trade. In order to determine the impact of the U.S. tariff rate quota and other factors on sugar trade, this analysis adapts the standard gravity model for a single-commodity. Estimation of the model is carried out using panel data and includes the Unites States and 13 western hemisphere countries. Variables are chosen to augment the standard gravity model in order to identify and capture the effects of transactional costs and productivity on the sugar industry. This research demonstrates that although quotas have been important in determining U.S. sugar imports, relative factor endowments, domestic production, and free trade agreements are key factors influencing sugar trade