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International Trade and Sugar Policy Costs

Issue: The U.S. sugar policy is perceived by some as inconsistent with international trade obligations.

After several long years of international trade negotiations among more than 100 countries, the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) came to a successful conclusion. U.S. sugar policy is fully consistent with the GATT and supports the elimination of all trade distorting policies.

U.S. sugar policy made several concessions on market access. A minimum sugar import was set at 1.26 million tons (14 percent of U.S. sugar consumption and 3 to 5 times the minimum access requirement). GATT requires elimination of Section 22 authority to impose quantitative restrictions on imports which pose a threat to the operation of the sugar policy.

Under an agreement reached at Blair House during the negotiations no U.S. commodities would be required to reduce internal supports during the transition period.

The GATT agreement will not reform the world sugar market. It is of note that 60 percent of world production and exports are from developing countries that receive “special and differential” treatment. There will be little if any effect on subsidized European Union (EU) exports (reported at 6.4 million tons in 1994).

U.S. Sugar Policy Perceived Costs

Issue: U.S. sugar policy is perceived by some as a subsidy provided to a small industry at the expense of the taxpayers.

An erroneous claim persists that U.S. sugar policy is a subsidy provided to a small industry that costs the taxpayers large amounts of money. The fact is, U.S. sugar policy costs the U.S. government nothing. As mandated by Congress (Public Law 99-198) since 1985, the sugar policy is to be administered at no cost to the U.S. Treasure, which means no cost to taxpayers. To emphasize: No subsidies are paid to U.S. producers of sugar beets or sugarcane.

As a matter of fact, U.S. sugar policy has provided a significant net benefit to the U.S. Treasury in these ways:

An assessment of 1.1 percent of the loan rate on processed and refined sugar, as stipulated 1992 law, amounts to a $30 million tax on the sugar industry annually to help offset overall farm program costs.

U.S. sugar policy has played an important role in the development of the U.S. corn sweeteners industry, which now consumes about 10 percent of all the corn marketed in the United States. This raises the price of corn by an estimated 25 cents per bushel and, according to USDA, saves the U.S. government some $500 million to $700 million per year in deficiency payments to corn growers.

cording to Landell Mills Commodities Studies of Oxford, England.

An analysis of the issues affecting the U.S. sweetener industry along with information addressing those issues, prepared by the American Sugar Alliance

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