Home Economics Disaggregated impacts of CAP reforms : proceedings of an OECD workshop.
The EU sugar beet policy in the pre-reform period
The sugar Common Market Organization (CMO) was created in 1968 as part of the Common Agricultural Policy (CAP) in order to guarantee European beet sugar producers a fair income, to provide self-sufficiency in sugar, and to ensure that supplies reached domestic consumers at reasonable prices. The sugar regime encouraged beet sugar production and deterred imports from the world market. The regime consisted of four pillars: price guarantees, production quotas, production levies and export refunds, and border protection, which later became a system of preferential import quotas. Budget expenditure associated with the regime was relatively negligible as funding was derived from profit-bearing prices paid by consumers.
The first major change of the sugar CMO occurred in 1975 following the United Kingdom’s accession to the EEC in 1973. At the time of accession, the United Kingdom imported on an annual basis about 2 million tonnes of raw sugar under the British Commonwealth Sugar Agreement. As part of their accession agreement, a preferential import programme was agreed to with traditional developing suppliers, known as the African, Caribbean and Pacific (ACP) countries. The ACP Sugar Protocol effectively translated a United Kingdom commitment to the Commonwealth into a European Union commitment to the ACP. However, preferential access was reduced from about 2 million tonnes of white value imported by United Kingdom refineries to 1.3 million tonnes of raw sugar. Preferential import quotas have since become an integral part of the sugar CMO. Moreover, although the ACP imports initially just covered the gap between domestic production and demand in the United Kingdom, increased production within the European Union after 1975 resulted in the necessity to export an equivalent quantity of sugar. Re-exports at world prices that were lower than those paid by the European Union to ACP exporters triggered export refunds charged to the European Community budget.
The expansion of the European Union between 1980 and the 1990s marked the entry of two additional countries with refining capacities (Portugal and Finland). In order to accommodate the needs of their refineries, new adjustments to the import regulations were introduced which allowed raw sugar imports from countries outside of the ACP Protocol (82 000 tonnes from Cuba and Brazil) to be imported under Most Favoured Nation (MFN) arrangements. In March 2001, the European Union adopted the “Everything-but-Arms” (EBA) initiative which gives duty-free access to all exports from least developed countries, with the exception of arms and armaments. In the case of sugar, however, the EBA free access initiative was phased-in up to 2009, when duty-free access was finally allowed.
With the exception of the above changes, the sugar regime, normally reviewed every five years, remained largely unchanged from the system originally established in 1968. In 2005, the EU sugar balance was as follows:
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