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A Brazilian Reasons Not to Kill off U.S. Sugar Industry

(November 12, 2013) – Opponents of the current U.S. sugar policy rarely get beyond their global free-market talking points long enough to consider the International Law of Unintended Consequences.

Fueled primarily by large candy makers, opponents continue to demand an end to U.S. tariffs and import quotas on heavily subsidized and artificially cheap foreign sugar as a way to help pad their bottom lines. But opening the flood gates to cheap imported sugar from around the world will only make the bad situation the U.S. already suffers thanks to NAFTA and cheap, heavily-subsidized imported Mexican sugar worse.

Indeed, as already occurred in Europe a few years ago when their own domestic sugar protections were lifted, the inability of U.S. sugar producers to compete with heavily subsidized foreign imports will inevitably wipe out our domestic sugar industry. At which point we will be 100% reliant on imported sugar.

And at Brazil’s mercy.

This isn’t mere hype. Consider how dependent the U.S. has been on imported oil from OPEC for the last few decades. Now consider that while Saudi Arabia controls about 10% of the oil market, Brazil controls almost 50% of the sugar market.

And as Wall Street Journal columnist Mary Anastasia Grady recently pointed out, “Brazil’s best friends under the Workers’ Party of (President Dilma) Rousseff and her predecessor, Lula da Silva, are Cuba, Iran and Venezuela.”

Equally troubling, a Miami Herald column in September quotes an unnamed U.S. ambassador who noted that “in almost all conflicts, the Brazilian government agrees with the political lines of Russia and China.”

Grady further reports that Brazil, under the Workers’ Party leadership since 2002, “has gone from being an up-and-comer to a has-been that never was.” In addition, she notes that “warnings from credit-rating firms of impending downgrades of Brazilian debt are based on deteriorating fiscal accounts and rising debt and inflation.”

“Having bungled the chance to become a serious economic player in international markets anytime soon,” Grady concludes, “Brazil’s government acts as if its global relevance depends on raising the country’s profile as one of the bad boys of South America.”

So put in its proper global perspective, unilaterally eliminating the current U.S. sugar program isn’t just a theoretical exercise on free-market economics, but a decision with potentially dangerous geo-political and national defense consequences.

Clearly there is more to this issue than cheap imported sugar and bigger candy-maker profits.