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For Free Market Sugar, WTO only Way to Go

A new study by Dr. Mark Hartley, a Professor of Business at the College of Charleston, concludes in a new study that there’s only one way to find common ground and resolve the differences between supporters of the current U.S. sugar policy and its opponents…pursuing a “zero for zero” sugar policy at the World Trade Organization (WTO) that ends all market-distorting policies and allows a free market to form.

Some highlights from the study…

  • “Because there are no subsidy checks” for sugar farmers, current U.S. sugar policy “is by far the cheapest major commodity program for taxpayers.”
  • Full implementation of NAFTA in 2008 means “the U.S. cannot limit sugar from Mexico, which can now ship unlimited quantities” and “has created unsustainable oversupplies.”
  • Meanwhile, Brazil “has seized control of fifty percent of global exports using decades of heavy subsidization.”
  • In addition to foreign subsidization, world market sugar prices are artificially lower “because most sugar is produced in developing countries with lower taxes, lower wages and lower regulatory burdens.”
  • While “U.S. sugar prices have remained essentially flat” between the 1980s and today, “candy bar prices are up five percent, as well as cereal and baked goods, up nine percent, and ice cream, up twelve percent.”
  • After initially seeing sugar prices drop 22% after implementing its own reform of sugar policies in 2006, the European Union now suffers sugar prices that are 10% higher than they were before reform.
  • In addition, since the EU reform effort, “five EU member countries have given up sugar production entirely” and “five others now produce less than half of previous output levels.”
  • Also, while the old EU sugar policy incurred “minimal cost to the general taxpayer,” the new policy “is costing taxpayers about $1.6 billion a year” in farm subsidies.
  • A worldwide zero-for-zero policy reform model “would push for zero subsidies abroad” as well as “lift restrictions and tariffs” presently imposed by the U.S. on imported sugar.
  • Currently “there are more than 100 sugar producing countries worldwide, and there are also basically 100 different sugar policies.” For that reason, efforts to reform U.S. sugar policies “cannot be done unilaterally” or through bilateral trade agreements.

The study concludes: “The WTO is unquestionably the only entity that can deal with all sugar subsidies in all countries at the same time. And if Brazil or other top producers refuse to participate via WTO pressure, the existing tariffs on foreign subsidized sugar imported to the U.S. market should remain in place, although this option is clearly not the preferred approach.”

You can read the full report here: