Do America’s sugar policies harm consumers?
“America’s highest remaining trade barriers are aimed at products mostly grown and made by poor people abroad and disproportionately consumed by poor people at home,” wrote Daniel Griswold in a September 29th Washington Times article. He then identified numerous government trade policies that adversely affect low-income populations: Chinese tire tariffs increased the price of low-cost tires, cash-for-clunkers increased the price of used vehicles, and the 2008 farm bill imposed tariffs on staples such as “imported sugar, milk and cheese.”
Daniel Griswold, director of the Center for Trade Policy Studies at the Cato Institute, spoke on “Tricked on our Treats: Time to Rethink the U.S. Sugar Program” at Cato on October 30th. He and William Reinsch, President of the National Foreign Trade Council (NFTA), censured U.S. protectionist policies on sugar, which they both agreed negatively impact American consumers and manufacturers.
On June 19th, 2008, Congress passed the most recent farm bill, the Food, Conservation and Energy Act of 2008. This bill includes many protectionist measures, warned the panelists, with sugar being one of the most cosseted. Sugar accounts for the third most costly U.S. trade barrier, after textiles and dairy, said Reinsch.
It is not the consumer that benefits from the U.S. sugar program; rather, thanks to the efforts of sugar lobbyists such as the American Sugar Alliance, a few thousand sugar producers are enriched, argued Griswold. Also hurt by these protectionist policies are sugar-using industries who have been forced to lay off workers and relocate factories due to costs incurred from superficially high sugar prices, he said.
Due to the tariffs imposed on sugar imports, foreign suppliers cannot compete with domestic markets—domestic sugar-producers account for approximately 80% of the domestic market for sugar. The U.S. Department of Agriculture (USDA), is “attempting to micro-manage supply and demand of commodities,” wrote Sallie James on August 19th on Cato-at-Liberty.org. Consequently, U.S. companies in the past 25 years have been forced to pay two to seven times the global price, eroding their global competitiveness. In Griswold’s October 8th Detroit News article, “Obama Cuts Sour Deal on Sugar,” he lists several sugar-reliant companies that have closed domestic facilities due to the high price of domestic sugar. For example, “Hershey Foods closed plants in Pennsylvania, Colorado and California while moving production to Canada” because, in Canada, sugar prices “average less than half of U.S. prices.” Approximately “6,400 workers in the sugar-processing industry have lost their jobs because of their own government’s deliberate policy to drive up the cost of their major input,” wrote Griswold.
At Cato, Griswold said that “protection[ism] is a conspiracy against liberty” and that it “tramples on the spirit, if not the letter of anti-trust laws.” The trend in Congress, observed Bill Reinsch, has been towards more protectionism in the sugar trade.
In his Detroit News article, Griswold stated that President Obama has “kept a campaign promise to the sugar lobby at the expense of American families struggling to pay their grocery bills and U.S. manufacturing workers fighting to keep their jobs.”