US sugar group defends government trade program at ITC

10.02.2017

The American Sugar Alliance (ASA) again came to the defense today of the government programs that keep floods of foreign sugar out of the U.S. through a tariff rate quota system.

The U.S. International Trade Commission (ITC) held yet another hearing as part of an ongoing investigation into tariffs and other trade policy that began about 25 years ago with the first publishing of its “Economic Effects of Significant U.S. Import Restraints.”

Sugar is just a part of the wide-ranging ITC investigation, but Jack Roney, ASA director of economics and policy analysis, said he testified because it’s important to the group that the government agency understand just how critical sugar policy is to growers and processors.

Opponents of U.S. sugar policy have argued that U.S. barriers to imports keep sugar prices abnormally high in the U.S. and contribute to companies that use lots of the sweetener plants to Mexico.

But Roney told Agri-Pulse that argument has been proven false. If companies do move, he said, it’s for cheaper labor and not sugar supplies.

The ASA, in testimony presented to the ITC by Roney, said the commission only has to look at the harmful effects of allowing unlimited sugar imports from Mexico to know that doing the same for the rest of the world would be a mistake.

“While Mexican producers prospered during the free-trade period (2008-2014), with domestic sugar prices often higher than the U.S., American producers suffered huge revenue losses,” the ASA said. “More American sugar mills have closed and USDA incurred a cost to manage U.S. sugar policy for the first time in more than a decade.”

The U.S. completely removed all restrictions on Mexican sugar by 2008 as part the North American Free Trade Agreement (NAFTA).

ASA also noted that the ITC has previously ruled that Mexico had injured the U.S. sugar industry by shipping subsidized sugar here at below-market prices. The ASA was the only organization to testify on U.S. sugar policy at the ITC hearing today.

The Sweetener Users Association, which represents food and candy companies that purchase sugar, did not testify. A spokesman contacted by Agri-Pulse said the group will be presenting written testimony to the ITC at a later date. The ITC deadline for all submissions is Mar. 1.

Mexico aside, the U.S. maintains a complicated system of TRQs for sugar exporting countries around the world as well as domestic controls on production in order to keep supplies and prices at levels that keep farmers and domestic mills in operation.

Increased supplies from Mexico did drive down U.S. prices, but U.S. consumers did not benefit from cheaper food, the Alliance argued.

“Retail refined sugar and sweetened-product prices did not fall, and, in fact, rose over the period of Mexican dumping and its aftermath,” ASA said. “Passing none of its savings on cheaper sugar along to consumers, the sweetened-product-manufacturing sector maintained its status as one of the most profitable sectors of the U.S. economy and has continued to expand its operations in this country.”


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