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Australia Takes Gloves Off in Fight over India’s Sugar Subsidies

(Chuck Muth, President, Citizen Outreach) – Critics of the U.S. sugar program of limited import quotas and measured tariffs claim such protections are anti-free market.

However, it’s not a free market if the market isn’t free of government assistance and subsidies by foreign competitors.  And with players such as India in the game, the global sugar market ain’t free by a long shot.

As Tom Major of ABC Rural reported last month, Australia is moving forward “with plans to force India to end subsidies for its sugar exporters” by filing a complaint with the World Trade Organization (WTO).

According to the report, Australian Trade Minister Simon Birmingham “said it was time India was held to account for its market distorting policies on sugar.”

Sugar industry officials note that India’s subsidized exports have resulted in “significantly depressed prices” which are “well below the cost of production” and could “cripple profits for years to come.”

Canegrowers chairman Paul Schembri criticizes India “for its role in the pain his members were experiencing,” estimating “the Indian Government may have sent around $50 billion dollars in industry support since 2012.”

“Formal action by the Australian Government at the WTO,” Schembri said, “will send a powerful message to India and other countries contemplating subsidies, that the Australian Government will do whatever is lawful to ensure cane growers receive a fair sugar price.”

Yet India seems not to care.

A separate report last week by Sharad Vyas in The Hindu notes the Indian government “plans to revive 40 defunct sugar mills” by providing government financial aid to various “sick and closed” sugar operations.

When a government is propping up its private sector and providing an unfair advantage over competitors, that’s not a free market.  That’s a seriously distorted market.

Which is why it is critical to keep the current U.S. sugar program in place – at least until America’s foreign competitors take off the training wheels.