EBA-equivalence for non-LDC Sugar Exporters?

The EU’s Everything but Arms (EBA) initiative provides preferential access to the EU for least developed countries’ (LDCs) agricultural exports. This involves unrestricted duty-free access for most of these products, though in the case of a few sensitive products, including sugar, the liberalisation is to be phased between 2008 and 2009. EBA offers the agricultural-exporting LDCs the opportunity to increase agricultural production and exports. In the case of those agricultural products, including sugar, which are particularly highly protected it offers the opportunity to gain a high margin of preference and a large potential income transfer associated with the excess of the EU over the world price (and potentially also in excess of the cost of production in these developing countries). Of course this margin of preference and any associated income transfer will be eroded by the expected reform of the EU’s Common Agriculture Policy over the coming years, which will reduce EU domestic prices and lower EU tariffs on agricultural products. The recently announced reforms to the EU’s sugar regime illustrate this development. This issue of Trade Hot Topics summarises the findings of a study into the nature of EBA-equivalence and its implications for a range of non-LDC sugar exporters.