ABSTRACT
The EU sugar market is heavily supported: the domestic price has averaged two to three times the world price. The EU Common Market Organization (CMO) for sugar is based on the use of import tariffs, the special safeguard permitted under the WTO Agreement on Agriculture (AoA), export subsidies, production quotas, and a guaranteed minimum price. Under the 2006 EU sugar reform, the intervention price is reduced by 36 per cent over four years, and then replaced by a reference price supported by a private storage safety net system. Although the EU is the world’s second largest exporter of sugar, it is also the second largest sugar importer, thanks to the role played by preferential agreements. Of these, the SP has been the most important. The SP is a bilateral agreement between certain ACP States and India and the EU first agreed as part of the 1975 Lomé Convention and later incorporated into the Cotonou Agreement. Under the protocol the EU undertakes to purchase and import, at guaranteed prices, specific quantities of cane sugar, raw or white, which originate in the signatory states and which these states undertake to deliver to the EU. The SP provides for duty-free entry of 1,304,700 tonnes of sugar, white sugar equivalent, with 1,294,700 tonnes allocated to ACP countries and 10,000 tonnes to India. These quantities are distributed to individual SP signatories as shown in Table 10.2. In addition, SP signatories have access to a market of around 220,000 tonnes per year under the Special Preferential Sugar (SPS) regime, although this figure is diminishing each year as imports from least-developed countries (LDCs) under the EBA initiative increase.3 Table 10.2 also gives an indication of the importance of sugar exports to individual economies. Some countries have a particularly high dependence on sugar earnings, including Swaziland, St Kitts, Guyana, Fiji and Belize.
