Foreign Sugar Subsidies Exposed

Published online: Sep 25, 2008 ASA-Phillip Hayes
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WASHINGTON-U.S. trade negotiators now have a roadmap that will help them target widespread subsidies and other government market-intervention policies that are prevalent in other countries, thanks to a study released today by the American Sugar Alliance (ASA). Sugar producers hope this handbook of foreign sugar subsidies-which was delivered today to key officials at the U.S. Trade Representative's office, the U.S. Department of Agriculture, and Congress-will give American negotiators the ammunition they need to go after market-distorting practices at upcoming WTO discussions. According to the handbook, which was compiled by LMC International, an independent commodities research firm based in Oxford, England: Brazil's sugar industry continues to benefit from an ethanol infrastructure built on decades of subsidies and mandates. In addition to its government-created ethanol empire, sugar farmers have access to credit at below market rates and have prospered in the past from regional subsidy payments made to growers and from massive debt relief. China's government dictates nearly every aspect of its sugar sector with strict tariffs, a licensing board that erects hurdles to imports, restrictions on competing artificial sweeteners, taxpayer-funded sugar stockpiles used to manipulate price, and a state trading company responsible for 70% of domestic sugar sales. Colombia prefers prohibitive barriers to block foreign competitors, including tariffs and regional duties. Ethanol mandates and a government-sanctioned price band system also give Colombian producers a leg up. India's trade-distorting policies include import tariffs, numerous export subsidies, and price supports. Mexico's government has a clear interest in the health of its sugar industry. That's because the government owns nearly one-third of the country's sugar mills, 13 in all. The government has helped maintain an artificially high domestic price to benefit its mills through import tariffs and taxes on alternative sweeteners. Government officials are currently discussing the creation of a new subsidy system to better control prices. Thailand has become a world leader in sugar production through an intricate web of government controls and financial incentives, such as state price fixing, tariffs, debt restructuring, and supplementary subsidy payments to growers in the past. U.S. sugar producers have long advocated for a world sugar market that is completely free of all subsidies and government intervention. Efficiencies in the U.S. sugar industry would make it a clear winner under such a scenario, according to the ASA. But America's sugar growers question the direction of current trade negotiations, which call for the weakening of U.S. sugar policies while the status quo would be allowed to reign in the most heavily subsidized countries. For more information on this new release contact Phillip Hayes at 202-661-4688