Doha to have little overall impact on sugar--study

Mon Nov 2, 2009 6:54am EST

* EU, US, Japan seen avoiding sugar tariff cuts with waivers

* Will have to increase low-duty import quotas instead

* Also face caps on domestic support,end of export subsidies

GENEVA, Nov 2 (Reuters) - Proposals in the Doha trade deal under negotiation are unlikely to open up the sugar market much as the European Union, the United States and Japan will use waivers to avoid big tariff cuts, a study issued on Monday said.

The proposals would force the European Union in particular to cut domestic prices and production, and would push up world prices by reducing the output of small, high-cost producers like Fiji and Mauritius, said the study issued by the International Centre for Trade and Sustainable Development (ICTSD).

"Despite the fact that consumers will face a higher world price for sugar, they benefit from the reduction in the cost of supporting the domestic sugar industry," according to the study, by Amani Elobeid of the Food and Agricultural Policy Research Institute at Iowa State University.

Under current proposals drafted in December last year, the European Union, the United States and Japan would cut tariffs on sugar by 70 percent, while most developing countries would cut them by 36 percent, the study notes.

This would push up the world sugar price by 1 percent as imports increase in response to lower duties. But as other countries respond to the higher price by curbing imports there is only a 0.7 percent increase in trade in sugar, it said.

World sugar production in 2008/09 was 158.55 million tonnes, while net trade -- total exports less total imports -- was 33.96 million.

However the big sugar importers and producers are likely to declare sugar a "sensitive product", allowing them to avoid tariff cuts in return for letting in a quota at low duties.

The European Union could raise its quota by 700,000 tonnes to 2 million tonnes, while the United States would increase its quota by less than 300,000 tonnes to 1.4 million.

These quota expansions, linked to domestic consumption, would represent only 3 percent of world trade, the study says.

Thailand, Malaysia and South Africa would have to expand their quotas most, while China, Venezuela and the United States would make the smallest expansions.

Other proposals would cap domestic subsidies at 5.9 billion euros for the EU and $1.1 billion for the United States.

The planned elimination of export subsidies may force the EU, already a net importer, to cut domestic sugar prices and production, the study said.

Trade liberalisation is likely to hurt small high-cost producers like Barbados, Fiji, Guyana, Jamaica and Mauritius, which have traditionally exported to the EU under preferential arrangements.

"Natural" producers like Brazil -- the world's biggest sugar exporter with 60 percent of world trade -- Australia and Thailand will benefit most from trade opening, it said. (For full ICTSD study go to link.reuters.com/xar27f ) (Reporting by Jonathan Lynn, editing by Tim Pearce)

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