Give President Trump the Power to Negotiate Sugar Subsidies Away
“President Trump believes that American food producers have not been treated the fairly on international stage and has committed to levelling the playing field for America’s farmers.”
That’s one of the clear statements contained within last month’s White House report titled, "What You Need To Know About President Donald J. Trump’s Success Opening International Markets To U.S. Agriculture."
President Trump proved this concern last year when he stood up for U.S. sugar farmers and saved U.S. sugar jobs by stopping Mexico from breaking our trade laws and dumping subsidized sugar on the market. Now, some in Congress are looking to undo that action, inviting others to dump subsidized sugar in America and jeopardize domestic production. If our president supports sugar farmers, our Republican lawmakers should too.
Unfortunately, like dandelions popping up all over your spring lawn, those who continue to push for unilaterally ending farm subsidies are back. Once again, they are trying to sell political poison to GOP members under the false narrative that the world economy operates as a free market. And the much-despised sugar industry is proof that unless foreign agriculture subsidies are dealt with, it is beyond foolish to end domestic ones.
GOP members of Congress should remember that the European Union played guinea pig on the sugar subsidy issue, unilaterally ending them in 2006 with disastrous results. Patrick Chatenay, the president of ProSunergy (UK) Ltd, wrote in his 2012 report "Lessons from the 2006 EU Sugar Regime Reform" that the promise by those who argue for unilaterally ending subsidies that consumers will benefit doesn’t hold up.
Chatenay reported, “After dropping 22%, bulk refined sugar prices in Europe are now (2012) some 10% above what they were before the reform. As any business manager will tell you, additional risk entails additional costs. Since the end of 2010, the EU sugar market has been characterized by high and volatile prices, and a shortage of supplies – thus mirroring world market gyrations. The sugar users who lobbied hard for the reform – companies such as Nestle, Coca-Cola and Kraft – are complaining just as loudly as before.”
The European job losses were equally disastrous as the 2006 reductions in domestic marketing quotas and price guarantees ultimately led to the closure of 83 sugar mills and the loss of 120,000 jobs.
In a 2015 follow-up report about policy reforms, Chatenay found that sugar supports had been restored in the EU with sugar growers receiving $665 million a year in subsidy checks.
The illusion that foreign subsidies will suddenly end, allowing U.S. sugar producers to survive a unilateral end to domestic support programs, is belied by the fact that in 2017 alone China, and mammoth exporters India and Brazil among others, announced new, expanded protectionist measures for their sugar industries.
Rather than sign a death warrant for U.S.-produced sugar and repeating the EU’s costly mistake, Congress should reject the politically and economically naïve Sugar Policy Modernization Act, and instead support Representative Ted Yoho’s Zero for Zero legislation.
Under Zero for Zero, the president would be given an important card in the international sugar trade discussion – the end of U.S. sugar subsidies conditioned upon other nations similarly ending theirs. Those who argue for free markets should embrace this international ending of these subsidies using the World Trade Organization, and there is no excuse for failure to embrace the Yoho bill.
Unfortunately, many companies that fund anti-sugar efforts are enamored with the promise of being the end recipients of foreign sugar subsidies, ignoring the European proof that a foreign-controlled market guarantees product shortages followed by higher prices for everyone.
President Trump rightfully knows that U.S. agriculture tends to get the short end of the stick and has vowed a level playing field. Rather than fight with their president, Congressional Republicans should pass Yoho’s Zero for Zero legislation and strengthen his hand while he fights for our farmers at the international trade table.
The author is president of Americans for Limited Government