Modelling the EU sugar supply to assess sectoral policy reforms

We investigate the possible linkages between the EU sugar productionunder quota and the supply of C sugar. We calibrate the implicitcross-subsidy between in-quota sugar and out-of-quota sugar.The resulting supply specification is included in a computablegeneral equilibrium model of the EU economy detailing the agriculturalsector. We simulate the effects of the 2006 reform of the EUsugar regime and the effects of a ban on sugar export subsidies.Results suggest that the reform makes it possible to fill therequirements of the 2005 World Trade Organisation panel butthat further adjustment will be needed to eliminate all exportsubsidies as is scheduled for 2013.