Item

The potential impacts of EC reform, NAFTA and the GATT on Belize's sugar exports

Parham, Wendel D. J.
Date
1998
Type
Thesis
Fields of Research
Abstract
Sugar is the most important industry in Belize and contributes significantly to income, employment, output, exports, foreign exchange earnings and balance of payments. Over 90% of sugar produced in Belize is exported, with about 60% of sugar exports being marketed under preferential arrangements (duty-free access, quotas and guaranteed prices) in the UK and the US. These preferences, obtained under the EC Sugar Protocol of the Lome Convention and the US Sugar Quota Regime and the CBI, are being threatened by trade liberalization measures under EC Reform, NAFTA and the GATT. This study assesses the potential impacts of EC Reform, NAFTA and the GATT on Belize's sugar exports and makes recommendations for sugar policy formulation in Belize. A static partial equilibrium global net trade model for sugar, involving Belize, UK, US and a Rest of World region, was developed to carry out the analysis. Twenty-seven policy scenarios, based on potential changes in tariffs, quotas and prices for Belize's sugar exports in the UK and the US due to EC Reform, NAFTA and the GATT, were drawn up and simulated using the global sugar model under a medium term timeframe. The potential impacts of the proposed policy changes on the exports, production, consumption, export revenues and welfare with respect to Belize's sugar were evaluated against a 1989 base scenario. The results revealed that Belize's sugar would be negatively impacted by proposed changes in the UK and the US markets as a result of EC Reform, NAFTA and the GATT. Although Belize's sugar production and exports are expected to increase slightly under all the scenarios simulated, huge losses will be experienced in net revenues, quota rents, and total welfare with respect to Belize's Sugar Industry. The loss of preferences for Belize's sugar exports would require Belize's sugar industry to be competitive in sugar production and trade in order to maintain sugar sales on the world market. Belize's sugar industry will need to become more efficient at all levels of the industry - production, processing and marketing - in order to survive the challenges of an increasingly competitive world sugar market. Policy recommendations include improvements in sugarcane production, processing and marketing, development of alternative uses for sugarcane, sugar and sugar by-products, crop diversification, and improvement in overall policy coordination to sustain the industry, retain market shares and attract new investments into the industry.
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