An econometric analysis of liberalization of the protection policies for the U.S. sugar industry: The effects of gradual increases in the TRQ (tariff rate quota)
2007
Uebayashi, A.(Japan. Ministry of Agriculture, Forestry and Fisheries, Tokyo. Policy Research Inst.)
The United States has long maintained a TRQ system on the import of sugar as a means of protecting its domestic sugar industries. Due to the combination of TRQs and high out-of-quota tariff rates, sugar imports into the U.S. have effectively remained under quantitative restriction and domestic sugar prices have been supported at levels higher than world prices. TRQs are allocated on a country-by-country basis and less competitive countries such as the Dominican Republic and the Philippines are allowed to capture markets in the U.S.. Consequently, the TRQ system functions as an income support policy for those countries. The European Union has decided to substantially reform its longstanding sugar policies. This paper introduces scenario analyses measuring the impact of a similar substantial and gradual reform of U.S. policies using an econometrically developed world sugar model. According to the findings, if the U.S. increases its committed TRQ quantity by 15 per cent a year from 2007, the sugar price difference between domestic and international markets will be gradually reduced and will finally disappear by 2015. Therefore, it is projected that full liberalization of the U.S. sugar market will be achieved by that year.
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