Hardline considerations will be similarities related with fake rolex .

https://upscalerolexs.com/

The political economy of eliminating sugar quotas in 2015

The Commission’s legislative proposals for the CAP after 2013 published in October 2011 include no proposal to continue the sugar production quota regime. An intense struggle is underway between EU sugar producers who want an extension to the quota regime and sugar users who support the Commission’s proposal. We review the political debate in this post.
Opponents of sugar quota elimination

The European Committee of Sugar Manufacturers (CEFS) (here and updated here) accepts that quotas will end in the long term, but supports the continuation of the quota system until 2020 rather than 2015. It argues that the EU sugar industry has actively engaged and invested to further improve its competitiveness and efficiency since the 2006 reform of the sugar CMO. It seeks an additional five years to enable the European sugar industry to continue this improvement process and to capitalise on long term infrastructure investments.
They highlight the stability of the strictly regulated EU market, arguing that there can only be losers from the volatility that a liberalised sugar market would entail. They claim that all sugar producing countries in the world have introduced support mechanisms for their domestic industries with the objective of protecting them against the volatility of world sugar markets and improving domestic supply security, and say the EU should do the same. They contend that farmers would no longer be guaranteed beet prices, which would undercut the secured beet supply to sugar processors. They further argue that the resulting increased volatility on the EU sugar market would lead to higher sugar sourcing costs, at the expense of the EU food industry and consumers. The attractiveness of preferential access offered by the EU to Least Developed Countries (LDCs) and African, Caribbean and Pacific developing countries (ACP) would also be reduced without a stable EU sugar CMO.
The International Federation of European Beet Growers (CIBE) also calls for the quota system to be extended at least until 2020 here. It favours retaining the current system of market management which it believes ensures security of supply and allows the EU to honour its trade commitments to developing countries. It argues that removing all supply management tools will increase the volatility and jeopardize the security of sugar supply in the EU.
The beet growers claim that the EU sugar beet sector is nowadays not competitive enough to withstand the competition on highly volatile sugar world markets, and want more time for the investments necessary for the long-term sustainability of the sector. They also highlight the potential for the expansion of the isoglucose sector and the significant substitution of sugar with cereal-based sweeteners. They are further concerned about the weakening of beet contracts with processors in future interprofessional agreements and the abolition of the minimum beet price.
The ACP and LDC cane sugar suppliers oppose the elimination of quotas here. They are of the view that the elimination of sugar quotas as from 2015 disregards the EU market reality, the economic development objectives of the EU’s commitment to their countries as well as the key CAP objective of food security. They believe these proposals seriously jeopardize the EC market balance and will undermine all potential growth of the sugar industries of the ACP/LDCs as a result of a lower priced and more volatile EU sugar market. They constitute a deterrent to ACP and LDC to invest in increased efficiency – which the EU has encouraged with an allocation of €1.2 billion of Accompanying Measures. They also object that insufficient care has been taken to ensure policy coherence as mandated by Article 208 of the Treaty of Lisbon.
ASSUC, the European Association of Sugar Traders, argues here that the EU sugar quota system provides reliable conditions for the effective implementation of trade preferences under the Everything But Arms (EBA) initiative, the European Partnership Agreements (EPA) and Free Trade Agreements. Without quota restrictions, beet sugar producers may be expected to endeavour to maximize their sales within the EU, supplying markets hitherto reserved for preferential imports. The abolition of quotas is likely to encourage further concentration of beet sugar production in the hands of fewer agro-industrial groups. ASSUC therefore supports the maintenance of the quota system for the EU sugar market for as long as necessary to promote and/or defend the above considerations.
The European Sugar Refiners’ Association (ESRA) does not currently have a position on the continuation of sugar production quotas. Their main concern here is more favourable access to cane sugar imports with or without beet sugar quotas.
Supporters of quota elimination
On the other side of the argument, the European Sugar Users Association (CIUS) supports the end of the quota system here. It argues that the EU sugar quota system hampers the functioning of the EU sugar market by restricting sugar supplies, making it particularly difficult for the numerous small food processors to source sugar. Because EU within-quota sugar production covers less than 85 percent of EU needs for food, processors cannot satisfy all demand and prefer to conclude sales contracts with the largest users.
Similarly, the European Starch Industry Association, which produces isoglucose (cereal-based sugar) used in various food and drink applications calls here for the elimination of quotas on the grounds that they artificially limit the production of sugar and isoglucose, severely restricting competition in this sector and preventing these industries from growing. It argues that, with the expected buoyancy in world demand between now and 2020, production of EU beet sugar will increase and the WTO restriction on EU sugar exports would be lifted. Third country imports would still have a place, particularly from the ACP/LDC exporters which would still benefit from the preferential elimination of import duties.
There are also indications of where the policy-makers stand. The European Parliament, in its resolution of June 2011 (based on the Dess report), had already advocated that the 2006 sugar market regime be extended at least to 2020 in its existing form and calls for suitable measures to safeguard sugar production in Europe and to allow the EU sugar sector to improve its competitiveness within a stable framework. It also seems that a majority of sugar producing MS are also lobbying the EU to extend the sugar production quota system for up to five years in order to provide farmers and processors an orderly transition period.
Assessing future market conditions
Part of the reason for the differences in approach lies in the vested interests at stake and that there will be winners and losers from the reform. But some of the differences, for example, in terms of what is likely to happen to the EU market balance and imports, should be amenable to empirical analysis which should help to narrow the boundaries of the debate. Stakeholders obviously have different views on the likely impact of quota elimination on the EU market balance.
The Commission’s analysis in the impact assessment of its legislative proposals (and repeated in its published projections of the EU market balance up to 2020, see my earlier post) shows relatively minor impacts on EU production and imports. These projections have been criticised by industry sources for underestimating the likely growth in production not only from white sugar processors but also of isoglucose.
Additional insights on the future market outlook in the absence of quotas are given in a study produced by the LEI-Wageningen at the end of last year for the Dutch Ministry of Economic Affairs, Agriculture and Innovation. Although mainly oriented to looking at the impact of quota elimination on the Dutch sugar industry, the modelling (undertaken using the well-known CAPRI partial equilibrium model of EU agriculture) covers the EU-27.
Three scenarios are modelled. The baseline assumes the continuation of quotas and current import tariffs until 2020 and additional imports from ACP and LDC preferential exporters. A second, Doha, scenario models the impact of lowering tariffs by 70% while retaining quotas. The third, ‘quota-free’, scenario then considers the elimination of quotas in the context of the Doha scenario of lower import tariffs.
It is not clear why the Dutch steering group for the study took the view at the end of last year that a Doha Round agreement would not only be signed but also fully implemented by 2020. The inclusion of the tariff reduction scenario makes it harder to interpret the impact of quota elimination in the more likely situation where the EU retains its border protection. However, this can be approximated by comparing the results of the ‘Doha without quota’ scenario with the ‘Doha with quota’ scenario in the table below.

Quota elimination is projected to lead to an increase in EU sugar production. Production of sugar would increase (compared to the baseline in 2020) by 14% in the EU-15 relative to the Doha with-quota scenario, by 8% in the EU-10, and by 7% in the EU-2, for an overall production increase of 13% in the EU-27. Production in countries which already produce significant over-quota amounts for industrial use (e.g. France) is not expected to react significantly to quota elimination, apart from Germany where production is expected to increase significantly despite its relatively high current level of out-of-quota production. Most of the production increase comes from countries which produce at or just beyond the quota level currently (e.g. Denmark).
However, lower prices will also stimulate consumption so the impact on net imports is relatively small, expected to be a fall of 12% in the ‘Doha without quota’ scenario compared to the ‘Doha with quota’ scenario. I read these results as supporting the Commission’s view of rather modest impacts on the EU market balance from quota elimination, although it is not clear from the published study what assumptions have been made about isoglucose production.
The intensity of the lobbying shows that the rents which can be extracted from the current managed sugar market by producers and processors are clearly still very attractive even after the 2006 sugar reform.
The UK’s House of Lords Agriculture, Fisheries, Environment and Energy EU Sub-Committee has just announced a follow-up inquiry to their earlier enquiry into the EU Sugar Regime. The enquiry will cover the following issues:
• the abolition of quotas and other market management measures by 2015, and whether there is a case for a transitional period;
the governance of inter-professional agreements;
• the impact on third country producers and potential mitigation that may be required, including why there has been variable disbursement of compensation already made available to mitigate the impact of the earlier reform; and
• the extent to which the EU price reduction has been passed on to consumers.
The UK has traditionally taken a pro-consumer view of agricultural policy, but it is also an important beet producer as well as having a traditional sugar refining business. How the Committee navigates these conflicting interests will throw interesting light on the political economy of further EU sugar reform.
Photo credit Dag Endresen.

Print Friendly, PDF & Email