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EU Serves as Example of What NOT to Do on Sugar Imports

(Chuck Muth) – Back in 2006, the European Union – tempted by the lure of artificially cheap, government-subsidized imported sugar – nearly destroyed its domestic sugar-growing industry, leaving sugar consumers at the mercy of weather and political turmoil in other parts of the world.

What remains of the EU’s domestic market was hammered by a heat wave that hurt production this summer.  Which means Europeans are having to import more sugar.  However, that imported, government-subsidized sugar is no longer “cheap.”

Brazil, the world’s #1 sugar exporter, has shrunk global supplies by shifting more sugar to ethanol production.  And India, the #2 global sugar producer, has slapped on sugar export restrictions.  And then there’s Russia’s war in Ukraine.

All of which has contributed to higher prices across the board.  As Mumbi Gitau reported for Bloomberg this week…

“Companies making candy, cakes and soft drinks are paying much more than normal to source sugar in the near term.  That’s squeezing their profit margins and even raising the risk of some going out of business, according to CIUS, which represents European sugar users. For consumers, it’s threatening yet more inflationary pain.”

European candy-makers are now calling on the EU “to temporarily lift import tariffs” to bring down sugar prices.  However, as Mr. Gitau points out, such a move would hurt domestic growers and producers “at a time when (production) costs have jumped.”

This is the same “solution” favored by American candy-makers who continue to pressure for the elimination of the current U.S. sugar policy of modest import tariffs and restrictions on the import of foreign, government-subsidized sugar.

From a recent article in the Daily Sentinel in Rome, NY…

“Sugar is, of course, an essential ingredient in most sweet treats. The vast majority of the sugar we eat is either grown on sugarcane or sugarbeet farms in the United States or refined from raw sugar by American cane sugar refiners.

“But corporate candy companies don’t want to ‘Buy American’ when it comes to sugar. Candy companies like Hershey have spent years lobbying Congress to weaken U.S. sugar policy and allow foreign sugar producers to flood U.S. markets with subsidized sugar.

“If Hershey is feigning concern about the supply of sugar now, imagine what will happen when they are completely reliant on cheap foreign sugar? Other countries don’t have our best interests in mind and are likely to raise prices or restrict supply once their American competitors have been destroyed.”

Current U.S. sugar policy is fair…and it works.  American candy-makers aren’t suffering the same shortages as those in Europe, while the cost of domestically-produced sugar has remained comparatively stable.

When something works, don’t fix it.  Just ask the EU.

Mr. Muth is president of Citizen Outreach, a non-partisan grassroots advocacy organization