The goal of genuine global free trade in sugar is only possible through the World Trade Organisation (WTO), said a US sugar industry expert before a Senate Foreign Relations Subcommittee yesterday.
Jack Roney, director of economics and policy analysis for the American Sugar Alliance (ASA), said inclusion of sugar in regional or bilateral trade agreements, such as the proposed Central America Free Trade Agreement (CAFTA) or the Free Trade Area of the Americas (FTAA), would spell disaster for all sugar producers in the Western Hemisphere - except the subsidised producers of Brazil.
The Sugar Alliance is a national coalition of producers, processors and refiners of sugarbeets, sugarcane and corn for sweetener. "Unfortunately, the world sugar market is highly distorted by a vast array of government subsidies and practices - so distorting that the so-called world market price for sugar has averaged barely half the world average cost of producing sugar for the past two decades," he said.
"The only way to achieve the goal of free trade in world sugar is to address all these practices, in all these countries, through comprehensive, multilateral negotiations in the WTO."Citing a number of trade agreements, such as the Mercosur agreement among Brazil, Argentina, Paraguay and Uruguay, Roney said there is ample precedent just within the Western Hemisphere for excluding sugar from regional free trade agreements.
"The only major FTA in which sugar was included is the US-Mexico portion of the NAFTA," said Roney.
"The controversy surrounding the sugar and corn sweetener provisions of the NAFTA have been enormous, and a severe strain on US-Mexico relations.".The US imports sugar from 41 different countries, paying the foreign farmers the same prices that American farmers get for their sugar. Sugar exports from all FTAA countries are more than 15 million tons a year, 50 per cent higher than the United States total consumption.
"By far the greatest danger is Brazil. Boosted by decades of cane ethanol subsidies, direct sugar producer subsidies in some areas, low labour and environmental standards, and strategic currency devaluations, Brazil has increased its annual sugar exports from less than 2 million tons a decade ago, to a predicted 14 million tons this coming year."Roney claimed that Brazil could "overrun the United States and virtually every other Western Hemisphere country with its subsidised sugar - under an FTAA that includes sugar".