NCPA - National Center for Policy Analysis

Foreign Sugar Producers Have a Sweet Deal

January 24, 2003

Sugar producers in the 13 most important sugar producing countries besides the United States are the beneficiaries of many government subsidies, according to a report by the American Sugar Alliance (ASA), a sugar industry group. Foreign governments often engage in many forms of trade-distorting policies.

Australia and other countries that have called upon the United States, the European Union and Japan to reform their sugar policies, "are trying to have the best of all worlds" -- by focusing on other countries and diverting attention away from their own trade-distorting policies.

Among those policies:

  • Direct subsidies are provided to sugar producers in Northeast Brazil totaling about $200 million per year.
  • The European Union maintains very high domestic wholesale prices for sugar (over 30 cents/lb for white sugar) through a comprehensive system of import tariffs, production quotas and export subsidies.
  • Thailand maintains high import duties as well as licensing requirement for sugar -- no imported sugar has entered that country for a number of years.
  • The heavy involvement of the Mexican government in its own sugar industry -- expropriation of mills, debt restructuring, capital borrowing concessions and inventory financing -- has been valued at more than $1 billion per year.

According to one observer, the study's findings bolster ASA's view that the United States should engage in negotiations on sugar only within the World Trade Organization round of talks aimed at tariff reduction and trade liberalization -- not in bilateral negotiations with individual countries.

There are so many forms of subsidies that the only way to establish a free market for sugar is through multilateral negotiations.

Source: "Trade-Distorting Policies in the World Sugar Market," American Sugar Alliance, January 2003.

 

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