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October 14, 2014

Ending Sugar Subsidies the Right (the Only?) Way

 
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Because of our interest in trade policy and general opposition to government subsidies and other interference in private markets, we’ve done a few pieces on the issue of sugar subsidies, and lately about the best way to phase them out.

About this time last year we released “Solving the Sugar Subsidy Problem,” which outlined the basics of the issue and suggested that the solution must be some sort of global trade pact, most likely through a World Trade Organization (WTO) process.

And this past May we released “Seeking a Global Solution in Sugar Trade Policy,” which explained some of the enormous sugar subsidies and other trade distortions common to trading partners like Brazil, India, Mexico and Thailand. In the face of such global subsidies, only a global solution is probably workable.

Otherwise, you simply allow subsidized foreign competition to destroy our domestic sugar industry, after which time you could expect foreign suppliers to ratchet back up the price, as we explained.

Last week, Americans for Limited Government released a new paper reviewing the material on foreign sugar subsidies by those same four major producers (India, Thailand, Mexico and Brazil), and essentially pleading for free-traders and free-market promoters to embrace the global agreement model, as outlined by Rep. Ted Yoho (R-FL).

Essentially, the Yoho “zero-for-zero” proposal is a commitment by the U.S. that we would eliminate all our sugar subsidy programs if our trading partners would agree to come to a similar agreement. The Yoho plan would require some sort of trade agreement, either a bilateral or multilateral “Sugar FTA” or a WTO agreement. But, under Yoho’s plan, the U.S. takes the first step by making the commitment.

The alternatives are to either leave in place the status quo, which free-marketers and free-traders oppose, or unilateral disarmament, which free-marketers and free-traders (I argue) SHOULD oppose.




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