Impact of the " Everything but arms"initiative on the EU sugar sub-sector

This paper analyses the impact of "Everything but Arms" (EBA) initiative on the European Union (EU) sugar production, trade and agricultural income using the regionalised agricultural sector modelling system “CAPRI”. The CAPRI model distinguishes a supply and a spatial multi-commodity market module that interact iteratively. The supply module contains 200 non-linear regional programming models, each representing production patterns of 30 crop and 15 animal activities at NUTS II level. Trade flows in the market module between 13 world regions and the EU are endogenously determined. The impact analysis shows that the EU welfare and agricultural income is negatively but moderately affected by the EBA initiative due to the small relative importance of sugar beet in agriculture as a whole. EU sugar supply, trade and regional distribution of sugar production are significantly affected while EU sugar demand remains unchanged. As expected EU sugar imports increase from the LDCs while EU sugar exports decrease. The quota and duty free access for LDCs plays a major role for the captured products.