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This paper indicates the need for reform in the EU sugar sector due to the erosion of border protection in terms of further reduction in import tariffs for sugar. Three tariff reduction methods are assessed to project the border protection for EU sugar: Swiss formula proposed by the Cairns Group, Harbinson proposal by the World Trade Organization (WTO) and Uruguay Round formula proposed by the EU. In the assumed forthcoming multilateral round for agriculture, the EU would need to lower the support price for sugar by 67%, if the Cairns Group tariff reduction method is used. However, if the Harbinson method is used, the EU would need to lower the support price for sugar by at least 35%. On the contrary, the EU may avoid lowering the support price for sugar under three concurrent conditions: 1) the Uruguay Round formula is used as the reduction method in the new WTO round and the EU can use the minimum reduction rate of 15% for sugar; 2) world sugar prices will recover in the future; and 3) both developed and developing countries are allowed to use the Special Safeguard Provisions.

The impact of further tariff reduction on the EU sugar sector in the forthcoming multilateral round