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WTO Discipline and the CAP: the Constraints on the EU Sugar Sector

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  • Gohin, Alexandre
  • Bureau, Jean-Christophe

Abstract

The various assessments of the effects of a liberalization of world sugar markets are inconsistent with each other. One cause seems to be the modeling of the EU supply response. We investigate three possible linkages between sugar production under quota and the out-of-quota or "C" sugar supply: i/ the existence of fixed costs covered by the in-quota sugar; ii / the "overshooting" behavior as prevention against poor yields; iii/ the production of C sugar as "reference building" in view of expected reforms. Modeling these effects results in the introduction of an implicit crosssubsidy between in-quota sugar and C sugar. The resulting specification is included in a detailed model of the EU agricultural sector so as to account for intersectoral linkages. We simulate the effects of the 2005 reform of the sugar sector and the effects of a ban on sugar export subsidies.

Suggested Citation

  • Gohin, Alexandre & Bureau, Jean-Christophe, 2006. "WTO Discipline and the CAP: the Constraints on the EU Sugar Sector," Working Papers 18872, TRADEAG - Agricultural Trade Agreements.
    • Handle: RePEc:ags:tragwp:18872
    DOI: 10.22004/ag.econ.18872
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    Cited by:

    1. Butault, Jean-Pierre & Bureau, Jean-Christophe, 2006. "WTO Constraints and the CAP: Domestic Support in EU-25 Agriculture," Working Papers 18879, TRADEAG - Agricultural Trade Agreements.
    2. Alan Matthews & Jacques Gallezot, 2006. "The role of EBA in the political economy of CAP reform," The Institute for International Integration Studies Discussion Paper Series iiisdp133, IIIS.
    3. Elobeid, Amani, 2009. "How Would A Trade Deal on Sugar Affect Exporting and Importing Countries?," WTO Doha Round 320140, International Centre for Trade and Sustainable Development (ICTSD).

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