A new report finds that increased sugar imports under CAFTA would threaten the viability of the United States sugar industry and hurt sugar farmers in developing countries who are currently guaranteed a share of the US sugar market at a higher than global price. The report, Sweet or Sour: The US Sugar Program and the Threats Posed by the Dominican Republic-Central American Free Trade Agreement, by the Institute for Agriculture and Trade Policy (IATP), has several key findings:
- DR-CAFTA Will Lead to Major Disruptions to the U.S. Sugar Program.
Imports from DR-CAFTA would bring U.S. sugar supplies perilously close to a Congressionally mandated “trigger level” that would disrupt the entire program. When combined with Mexico’s right to export unlimited amounts of sugar into the U.S. under NAFTA starting in 2008 and several pending trade agreements that include sugar-producing countries, the U.S. will face a flood of sugar imports in the near future.
- DR-CAFTA Could Turn Sugar’s No Cost Program Into Big Bill For Taxpayers.
An increase in the supply of sugar would dramatically depress sugar prices to the point where the Sugar Program could be transformed from a no cost program to just one more expensive farm commodity program.
- DR-CAFTA Will Lead to a Price Drop for Sugar Farmers in U.S. and Many Developing Countries.
DR-CAFTA would jeopardize the current Congressional mandates to ensure that U.S. farmers participating in the sugar program receive a fair price from the marketplace.
- DR-CAFTA Will Result in Lower Sugar Prices for Farmers in Developing Countries.
If U.S. sugar prices drop, it would negatively impact the 41 countries, including some of the world’s poorest that now export sugar to the U.S. under the current program.
- DR-CAFTA Will Turn Sugar Into a Dumped Commodity on International Markets.
Unlike other major U.S. commodity programs, the Sugar Program actually prevents dumping on the world market at below the cost of production. The Sugar Compensation Mechanism in the DR-CAFTA allows the U.S. government to either pay DR-CAFTA countries in cash or sugar to compensate for blocked imports. This unsound provision could quickly turn the U.S. Sugar Program from a non-dumping into a dumping program.