Hidden subsidies sour world sugar price
www.gopbi.com By Larry Lipman, Palm Beach Post Washington Bureau Saturday, January 11, 2003
WASHINGTON -- Hidden subsidies are artificially depressing the world price of sugar at a time when many nations want to eliminate sugar import restrictions, according to a report released Friday.
The report commissioned by the American Sugar Alliance -- which represents most of the nation's sugar producers -- examined the policies of 13 countries (including the European Union) that account for 75 percent of world sugar exports to determine the level of support given to their domestic sugar industries.
The report found wide-ranging direct and indirect government supports including ethanol production programs, debt relief, industry subsidies and market interventions. The study was compiled by LMC International, an Oxford, England-based economic consulting firm specializing in the sweetener industry.
For example, in Brazil, the world's largest sugar exporter at about 13 million tons annually, most of the country's sugar production is used to make ethanol and is subsidized by a government program that reduces the domestic cost of sugar by about $1 billion a year, the report said. In addition, the Brazilian government provides about $200 million in direct subsidies to the sugar industry.
In Thailand, the government has pressured banks to postpone or reschedule debt of about $1.1 billion, while providing about $310 million in credit and subsidies, LMC said.
Alliance officials gave the report to Allen Johnson, chief agricultural negotiator in the office of the U.S. Trade Representative, and to key members of Congress who suggested the study.
The U.S. sugar industry is concerned about two major forces on world trade: an increase in negotiations such as the Free Trade Area of the Americas and recent talks with Central America that may lower U.S. import barriers on sugar; and efforts by a group of 14 sugar-exporting nations to lower trade barriers in the United States, Europe and Japan in the current round of world trade talks.
The U.S. needs to address sugar policy on a worldwide basis rather than in bilateral negotiations, said Don Phillips, the alliance's trade consultant.
"If we give a piece of it to each country, we won't have any leverage on a global basis," said Dalton Yancey, executive vice president of the Florida Sugar Cane League Inc., a Washington lobbying group.