Sugar Protectionism and the Export Earnings of Less Developed Countries: Variations on a Theme by R. H. Snape

Abstract

A recent article by R. H. Snape, published in Economica,1 relating to the international sugar situation in 1959, contains some interesting figures on the effects of sugar protection in raising the prices of protected sugar production above world market prices, and on the effect that elimination of sugar protection and heavy excise taxes on sugar would have on sugar consumption if existing protection were replaced by deficiency payments-and therefore on the effect these changes would have on the international trade in sugar. These estimates are subject to certain reservations, which Snape is properly careful to record; but bearing these reservations in mind, the estimates, or calculations based on them, throw some interesting light on the possible contribution that would be made to the export earnings of the sugar-producing less developed countries by changes in the policies of the developed (and some of the developing) countries of the world, such as have been recommended in the course of the United Nations Conference on Trade and Development of 1964. In the first place, Snape's calculations show the extent to which returns to sugar producers in the protectionist country exceed the world market price, and therefore give some indication of the extent to which the export earnings of the less developed countries producing for the free world market could be increased by according them the same prices as their protected competitors get, a type of policy advocated by Dr. Prebisch in his report, Towards a New Trade Policy for Development.2 According to these calculations, protected prices of raw sugar in the main consuming markets are from 60 to 105 per cent. higher than the free world market price. Some of this excess is now channelled to less developed countries through the U.S. Sugar Act, the British Commonwealth Sugar Agreement, and the Association of the Overseas Territories with the Common Market. But the free market accounts for some 40 per cent. of total international trade in sugar, which I estimate from Snape's figures to account for some 5,250