President Trump’s approach toward trade negotiations from day one has emphasized one theme above all others; the “bad deals” made by his predecessors. Whether in reference to the new NAFTA (USMCA), trade talks with China or Europe, the President has made it abundantly clear that America has suffered from lopsided trade deals in the past that handed our trading partners undue leverage and lopsided advantages that have hurt workers and U.S. consumers.
Trump’s stand against an unlevel playing field on trade stands as a stark reminder of the corrupt, distorted and unfair the global sugar market, where the big producing nations gain huge advantages through billions in subsidies to their domestic sugar producers. A new report on a unilateral surrender to the sugar cartels by the European Union (EU) shows just how dangerous and economically damaging these predatory trade practices can be, and is filled with warnings for the U.S. as some seek to liberalize America’s sugar program.
Thirteen years ago the EU stood down from its sugar policy, allowing other nations to dump cheap and subsidized sugar throughout their borders. The results, according to the report’s author, have been “catastrophic.” Europe saw an immediate outsourcing of a chunk of its sugar production, resulting in 83 sugar mills closed and 120,000 jobs lost. Producers who survived now must deal with a world market defined by a sugar glut that’s depressed sugar prices to below the cost of production. And despite the cheap prices, no benefits have accrued to consumers. The big winners are the food processors who reaped a $3.4 billion windfall in cheaper sugar prices, at the expense of the European sugar farmers and workers.
Europe’s only response is to return to their original policy of heavy subsidies for their own sugar producers. These subsidies now cost their taxpayers roughly $700 million per year to try to regain lost market share and support domestic agriculture. Still this is only a bandage that will only slow the economic assault they suffered, as more EU sugar factories will close as they cannot compete in this vicious global market of subsidies and protectionism.
Europe’s folly is a reminder to U.S. policy makers and trade negotiators what happens when we let our guard down and try to play fair with nations totally unfamiliar with the concept. Unlike other nations, the U.S. does not subsidize our domestic sugar industry or farmers, but merely supplies storage loans that are paid back with interest. Removing these cautionary safeguards in a volatile global market would be a disaster for U.S. farmers and consumers, and have us repeating the failed experiment of Europe to the tune of billions in economic harm.
The best and only solution given the current climate of the global sugar trading is complete and total disarmament among all nations, a true free-market system where the most efficient producers succeed, and inefficiency is not subsidized to suppress prices and inflate production. This is the only fair and viable solution that will return sugar to a healthy and secure free-market framework, ensuring stable prices and supplies for every nation. CASE has long supported this policy through Rep. Ted Yoho’s (R-FL) “Zero-for-Zero” proposal which does just this, letting the free-market dictate sugar prices and supplies and ending all government support for sugar producers. It’s the smart move, and it’s a fair solution that will finally end the sugar madness and put free-markets and consumers first. Anything else is just another bad deal for America.
