The European Union preferential trade with developing countries. Total trade restrictiveness and the case of sugar

In order to assess the extent to which developing countries receive preferential treatment from the EU, Conforti, Ford, Hallam, Rapsomanikis and Salvatici use a mercantilist trade restrictiveness index (MTRI). They demonstrate that although Least Developed Countries (LDCs) face a relatively low level of protection across all sectors, even before the implementation of the EU’s Everything but Arms (EBA) initiative, many developing countries are highly constrained in their trade with the EU. These developing countries include some of the more competitive developing countries such as Brazil and Argentina, but also the African, Caribbean and Pacific (ACP) non-LDC group. In agricultural trade, LDCs do not appear to be provided a high degree of preference by the EU, as they seem to face higher MTRI indices than other more developed countries such as Chile and Canada. Taking the issue of ACP non - LDC countries further, the paper investigates in more detail trade in sugar, a product where these countries face high protection at the margin. By using a global partial equilibrium model for the sugar market and a gravity model to replicate LDCs bilateral trade with the EU, to simulate EU sugar market reform proposals, they suggest that trade will be diverted from countries currently enjoying preferential access, particularly higher cost ACP countries exporting within the sugar protocol, and will be displaced by more efficient LDC producers.