Multilateral Trade and Agricultural Policy Reforms in Sugar Markets, September 2005

(2005) Multilateral Trade and Agricultural Policy Reforms in Sugar Markets, September 2005. Iowa State University


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We analyze the impact of trade liberalization, removal of production subsidies, and elimination of consumption distortions in world sugar markets using a partial-equilibrium international sugar model calibrated on 2002 market data and current policies. The removal of trade distortions alone induces a 27% price increase while the removal of all trade and production distortions induces a 48% increase by 2011/12 relative to the baseline. Aggregate trade expands moderately, but location of production and trade patterns change substantially. Protectionist OECD countries (the EU, Japan, the US) experience an import expansion or export reduction and significant contraction in production in unfettered markets. Competitive producers in both OECD countries (Australia) and non-OECD countries (Brazil, Cuba), and even some protected producers (Indonesia, Turkey), expand production when all distortions are removed. Consumption distortions have marginal impacts on world markets and location of production. We discuss the significance of these results in the context of mounting pressures to increase market access in highly protected OECD countries and the impact on non-OECD countries.

Item Type: Departmental Report
Keywords: agricultural policy, Doha, domestic subsidies, sugar, trade liberalization, WTO
Subjects: Business and industry > Economic development
Business and industry > Trade and commerce
Agriculture and food production > Agricultural finance
Agriculture and food production > Agricultual statistics
Agriculture and food production
ID Code: 2874
Deposited By: Margaret Barr
Deposited On: 13 Oct 2005
Last Modified: 13 Oct 2005