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Central American Free

Trade Agreement (CAFTA)

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Why the U.S. Sugar Industry Opposes CAFTA

The U.S. sugar industry opposes Congressional passage of CAFTA because it would significantly oversupply the U.S. sugar market in the short run, and would set a dangerous precedent for enormous oversupplies of foreign sugar in future FTAs.

The U.S. sugar industry is large and efficient. We are the world's fourth largest sugar producer, with 146,000 farmers and workers in 19 states. We are among the world's lowest cost producers. Two-thirds of the world's more than 100 countries that produce sugar do so at a higher cost than American sugar farmers. We are particularly proud of our efficiency because three-quarters of the world's sugar is produced in developing countries with starkly lower labor and environmental standards and costs.

The world sugar market is overrun with subsidized surplus sugar. All sugar-producing countries intervene in their sugar markets in some way. Many encourage the dumping of surplus sugar onto the world market. As a result of widespread dumping, the world sugar price has averaged less than half the world average cost of producing sugar for the past two decades.

The only way to address the global sugar subsidy problem is globally: Comprehensive, multilateral negotiations in the World Trade Organization (WTO) – all countries, all programs. American sugar producers endorse the WTO approach. We could compete with foreign sugar farmers on a level playing field free of government intervention. But until global reforms raise the world sugar price to a level that reflects the cost of producing sugar, we must retain our ability to restrict imports of sugar from the subsidized world dump market.

The U.S. is the world's fourth largest net importer of sugar, mainly because of WTO and NAFTA requirements to import large quantities sugar, whether we need the sugar or not. Current import commitments amount to about 1.5 million short tons, roughly 15% of U.S. consumption.

Unilateral import concessions in bilateral or regional free trade agreements (FTAs): do nothing to foster global sugar subsidy reforms; make the FTA countries more vulnerable to foreign subsidies; and squander the FTA countries' leverage to achieve foreign subsidy reductions. The U.S. Administration, appropriately, has said it will not negotiate away U.S. commodity support programs in FTAs, but rather reserve support program negotiations for the WTO.

But the Administration decided in the CAFTA to force the U.S. to more than double its imports from CAFTA countries and to effectively sacrifice the no-cost U.S. sugar support program.

In the short run, additional CAFTA imports could make continued no-cost operation of U.S. sugar policy impossible. CAFTA imports could trigger off the marketing allotment system that allows USDA to limit how much sugar domestic producers are allowed to sell onto the market. Producers store any excess, called “blocked stocks,” at their own expense. This balances the market and prevents prices from dropping so low that producers might forfeit their crop to the government to satisfy crop loans, and cost the government money. Unlike all other commodity programs, the government pays no subsidies to sugar farmers. Sugar producers are currently storing nearly 700,000 tons of “blocked” sugar to balance the market in the face of declining of US sugar consumption.

In the longer run, CAFTA would set a dangerous precedent. If the same template were applied to other FTAs, and the U.S. more than doubled imports from all of the 22 sugar-exporting countries with which it is currently negotiating FTAs, the U.S. would be flooded with subsidized foreign sugar. The cumulative effective of the release of blocked stocks onto the market and excessive imports could oversupply the U.S. market by more than 2 million tons, severely depress prices, cause significant government costs, and destroy the U.S. sugar industry.

The U.S. sugar industry urges that Congress defeat the CAFTA and that the Administration reserve sugar for negotiation in the WTO, and not in FTAs.

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	Central American Free Trade Agreement (CAFTA)

			Sign the petition here
Why the U.S. Sugar Industry Opposes CAFTA The U.S. sugar industry opposes Congressional passage of CAFTA because it would significantly oversupply the U.S. sugar market in the short run, and would set a dangerous precedent for enormous oversupplies of foreign sugar in future FTAs. The U.S. sugar industry is large and efficient. We are the world's fourth largest sugar producer, with 146,000 farmers and workers in 19 states. We are among the world's lowest cost producers. Two-thirds of the world's more than 100 countries that produce sugar do so at a higher cost than American sugar farmers. We are particularly proud of our efficiency because three-quarters of the world's sugar is produced in developing countries with starkly lower labor and environmental standards and costs. The world sugar market is overrun with subsidized surplus sugar. All sugar-producing countries intervene in their sugar markets in some way. Many encourage the dumping of surplus sugar onto the world market. As a result of widespread dumping, the world sugar price has averaged less than half the world average cost of producing sugar for the past two decades. The only way to address the global sugar subsidy problem is globally: Comprehensive, multilateral negotiations in the World Trade Organization (WTO) – all countries, all programs. American sugar producers endorse the WTO approach. We could compete with foreign sugar farmers on a level playing field free of government intervention. But until global reforms raise the world sugar price to a level that reflects the cost of producing sugar, we must retain our ability to restrict imports of sugar from the subsidized world dump market. The U.S. is the world's fourth largest net importer of sugar, mainly because of WTO and NAFTA requirements to import large quantities sugar, whether we need the sugar or not. Current import commitments amount to about 1.5 million short tons, roughly 15% of U.S. consumption. Unilateral import concessions in bilateral or regional free trade agreements (FTAs): do nothing to foster global sugar subsidy reforms; make the FTA countries more vulnerable to foreign subsidies; and squander the FTA countries' leverage to achieve foreign subsidy reductions. The U.S. Administration, appropriately, has said it will not negotiate away U.S. commodity support programs in FTAs, but rather reserve support program negotiations for the WTO. But the Administration decided in the CAFTA to force the U.S. to more than double its imports from CAFTA countries and to effectively sacrifice the no-cost U.S. sugar support program. In the short run, additional CAFTA imports could make continued no-cost operation of U.S. sugar policy impossible. CAFTA imports could trigger off the marketing allotment system that allows USDA to limit how much sugar domestic producers are allowed to sell onto the market. Producers store any excess, called “blocked stocks,” at their own expense. This balances the market and prevents prices from dropping so low that producers might forfeit their crop to the government to satisfy crop loans, and cost the government money. Unlike all other commodity programs, the government pays no subsidies to sugar farmers. Sugar producers are currently storing nearly 700,000 tons of “blocked” sugar to balance the market in the face of declining of US sugar consumption. In the longer run, CAFTA would set a dangerous precedent. If the same template were applied to other FTAs, and the U.S. more than doubled imports from all of the 22 sugar-exporting countries with which it is currently negotiating FTAs, the U.S. would be flooded with subsidized foreign sugar. The cumulative effective of the release of blocked stocks onto the market and excessive imports could oversupply the U.S. market by more than 2 million tons, severely depress prices, cause significant government costs, and destroy the U.S. sugar industry. The U.S. sugar industry urges that Congress defeat the CAFTA and that the Administration reserve sugar for negotiation in the WTO, and not in FTAs.













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