AGRICULTURE: by Patrick J. ByrneNews Weekly
US free trade deal: will it help sugar farmers?
, November 30, 2002
The proposed US-Australia free trade agreement is likely to be of little benefit to the Australian sugar industry, the fate of which is likely to be settled long before the signing of any such agreement.
US Trade Representative, Bob Zoellick, and Prime Minister, John Howard, have announced the intention of their two countries to sign a free-trade agreement by 2004.
The US is strongly pushing for Australia to abolish its single desk selling arrangements for wheat, barley, sugar and rice. It also wants eliminated "unjustified" quarantine restrictions on US pork, chicken, Florida oranges, apples, beef and California stone fruit.Single desk selling
Australia has maintained single desk selling for sugar and wheat to protect our farmers from exploitation on corrupt world markets.
Any agreement may take a lot longer than two years to complete. The Uruguay round of the World Trade Organisation took seven years to negotiate.
Further, it is unlikely that sugar will be included in any such agreement.
As reported in the Australian Financial Review
(November 16, 2002), well-known US trade expert, Gary Hufbauer of the Institute for International Economics in Washington, said the politics of the US probably would give the Bush Administration scope to deliver improved access to some Australian agricultural products, but sugar, he says, is just impossible. The concentration of votes and power around the Florida sugar barons is impregnable.
Even within the North America Free Trade Agreeement (NAFTA), some sensitive agricultural products were excluded and, while Mexico was promised improved access to the heavily cosseted US sugar market, eight years on it is still waiting for the bulk of that access. The sugar section of the NAFTA agreement has a 15-year phase-in period.
Hufbauer indicated the scope of the political impediments to an agreement that included sugar. He said that the prospects for the impending Doha Round of the WTO and the FTAA "are both looking clouded for the Bush Administration because they would require big concessions from the US in the midst of a presidential election campaign [the election is due in November 2004]."
Hufbauer said the US President's political adviser, Karl Rove, the hand behind the enormously controversial decision to impose punitive steel tariffs this year, is extremely wary of trade negotiations:
"Karl Rove would be very alert to giving any trade concession that might lose the Republicans a district or a seat. And after the congressional election last week, Karl Rove's capital is high and his reach is long."
The issues involved in US sugar politics were explored in testimony to the US
Committee on Agriculture US House of Representatives hearings on the proposed FTAA, in May 2001, from Jack Roney, Director of Economics and Policy Analysis for the American Sugar Alliance, and Jackie Theriot, president of the American Sugar Cane League.
They said, "The Uruguay Round Agreement on Agriculture in 1995 required imports of only 3-5 percent of consumption. But the United States bound its sugar imports at a level several-fold higher - a minimum of 1.256 million short tons, or nearly 15 percent of consumption, essentially duty-free. The US actually imported nearly twice the minimum in 1996 and 1997, and has imported at least the minimum each year since.
"Moreover, the NAFTA requires the United States to import up to 276,000 additional short tons from Mexico. Under both agreements, the US must import this sugar whether the domestic market requires it or not."
The US stockpile of sugar is one million tonnes, and at current rates is expected to blow out to 12 million tonnes within a decade.
Roney and Theriot added: "Sugar is not included in most bilateral and regional agreements. Because of the uniquely distorted nature of the world dump market for sugar and because of a wide range of border control issues, sugar has overwhelmingly been excluded from bilateral and regional free trade agreements.
"The Food and Agriculture Organization of the United Nations noted last year: ‘There are 124 regional trade agreements worldwide at this time, most of which substantially exclude sugar.'
- "Sugar is excluded from the [South American] Mercosur agreement among major producers Argentina and Brazil, with Uruguay and Paraguay.
- "Though Mexico reportedly has more bilateral and regional trade agreements than any other country, it has excluded sugar from virtually every one, including its recent agreement with the European Union, the world's second largest exporter of sugar.
- "Sugar is excluded from the U.S.-Canada portion of the NAFTA, which defers to WTO disciplines instead.
- "Sugar is excluded from the EU's free trade agreement with South Africa, also a major sugar exporter."