The Hill
February 2,2005
Free-trade pact isn't so sweet for sugar
lobby
By JIM SNYDER
STAFF REPORTER
A bitter legislative fight is brewing over sugar as lawmakers and
lobbyists prepare to debate a new free-trade pact with Central American
countries.
The deal, called the Central American Free Trade Agreement, or
CAFTA, would allow only a bit more sugar into America’s
long-protected market. The extra 100,000 tons it would let in
is just 1 percent of the 10-million-ton domestic market. Eventually,
that would rise to 150,000 tons.
But if the pact — which could be debated as soon as this
month — passes as written, the deal may be seen as the beginning
of the end of Big Sugar’s long reign as part of the politically
protected class. Observers say it is too close to call whether
the deal will pass.
Sugar growers and refiners opposed to the deal fear that CAFTA
could signal the end not just of their political power but also
their $4-billion-a-year industry as a whole as they increasingly
are forced through bilateral trade deals to compete against low-cost
cane producers.
“CAFTA is just the tip of the iceberg,” said Phillip
Hayes, the spokesman for the American Sugar Alliance.
Confectioners and other sugar users steamed at paying higher
sugar prices usually find themselves on the losing end to organizations
like the alliance, a powerful lobbying group that represents growers,
refiners and processors. The 2002 farm bill, for example, included
nearly all of the alliance’s priorities, according a Congressional
Research Service report.
But a collection of groups is arrayed against the sugar farmers
and processors who benefit from the current program. That includes
a new, 16-member Sugar Reform Caucus headed by Rep. Mark Kirk
(R-Ill.), whose Chicago-area district is home to Brach’s
and Jelly Belly candy facilities.
Kirk points to estimates that the sugar program costs $1.8 billion
each year in higher prices, which he says has forced candy makers
to close shop.
The current U.S. sugar program essentially guarantees a minimum
price through loans set at rates often higher than world market
prices, and it restricts the amount of sugar that can be imported.
Critics say prices are artificially high. In December, the global
sugar futures market was 8.8 cents per pound, compared to 20.5
cents here.
Sugar protections date back to at least the 1930s, with only
brief periods of unfettered trade. But Kirk and others are optimistic
that sugar’s power is dissolving, in part through free-trade
deals such as CAFTA.
“With an increased Republican majority there is greater
sympathy for letting the private sector make these decisions,”
Kirk said.
The politically savvy sugar industry could be tough to topple,
however.
“There have been anti-sugar caucuses for 20 years, and
they’ve been ineffective,” Hayes said.
American Crystal Sugar; Flo-Sun Inc., a Florida-based sugar agribusiness;
and the American Sugar Cane Growers Association are all in the
top 10 agribusiness givers to federal candidates and parties,
according to the Center for Responsive Politics.
Another factor: sugar sweetens local economies across a relatively
large geographical swath. Cane is grown in Hawaii, Louisiana and
Florida. Sugar beets are grown in 14 states, with the biggest
crops grown in the Red River Valley in Minnesota and North Dakota.
In Washington, the American Sugar Alliance spent more than $800,000
lobbying in the first six months of last year.
But what many say sets the sugar industry apart is its singularity
of purpose. Companies such as Mars and Coke and other food and
beverage makers that bristle under higher sugar prices have a
list of legislative priorities, of which sugar reform is just
one. Sugar growers and refiners are focused on protecting the
program.
U.S. trade officials, for example, received 70,000 letters during
their negotiations over CAFTA from people urging that sugar be
left out of the deal.
“They are almost zealots,” said Tip Tipton, a D.C.
lobbyist and former head of the International Dairy Foods Association.
The association’s members would benefit from lower sugar
prices for ice cream and chocolate milk products.
The debate over CAFTA will be unlike the fight over farm bills,
where Congress has usually resisted efforts to reduce price supports
for sugar. Growers and producers will have to battle a number
of free-trade coalitions in addition to food groups.
And sugar opponents say they are as organized as they have ever
been. The groups include the new Food Trade Alliance, an organization
of “consuming industries” patterned after a group
that successfully lobbied the administration last year to end
tariffs on steel imports. Its membership includes the National
Retail Federation, the National Restaurant Association and the
Food Marketing Institute.
Alliance members are meeting today to discuss the group’s
strategy for this year.
There also is the Emergency Committee for American Trade, which
includes manufacturers and other industries that stand to benefit
from freer trade.
In addition to the presence of more participants in the fight,
the terms of battle are different, too. Farm bills can be amended;
trade bills can’t. Lawmakers can only approve or reject
them outright.
The sugar industry’s most recent victory was won outside
of Capitol Hill. Sugar was left out of a free-trade pact with
Australia that Congress approved last year.
Both sides say CAFTA could reset the precedent for more sugar
imports.
Opponents fear that larger trade deals will be easier to pass
if CAFTA goes through. Of particular concern to many farming groups
is the Free Trade Area of the Americas, which would include ag
giant Brazil.
For that reason, several other ag groups in town are opposing
CAFTA, such as the National Farmers Union, which represents 300,000
small to midsize farms.
“The problem we have in rural America is there’s
this promise of ‘We’re just one trade agreement from
prosperity,’ but we never seem to make it to the corner,”
said Tom Buis, who runs the union’s lobbying shop.
Hayes, of the alliance, said his group wants free-trade deals
to be negotiated on a multilateral basis to ensure that U.S. growers
are competing on a level playing field.
Hayes and Buis said bilateral deals are unfair because often
the countries involved pay lower wages and have lower environmental
standards.
Hayes and his group contend that lower sugar prices will benefit
only corporate profits and won’t be passed on to consumers.
Copyright© 2005
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