Given his dismal record on free trade issues, perhaps it is not surprising that the current debate surrounding the sugar industry indicates that President Obama will continue to champion protectionist worldview. Last week, food companies sent a letter to Agriculture Secretary Tom Vilsack urging him to increase the stringent quotas in place to insure the amount of foreign sugar entering the American market is restricted. So far, the only action from the administration has been silence – the date by which an increase in quota was to be announced came and went without action.
However, an increase in quotas is only a prescription for the pain, not the disease. The underlying mechanism at work has damaged the American economy for years and in the current state of financial affairs, should be reevaluated and repealed immediately. Protectionist policies regarding sugar are some of the oldest in our history, and have done some of the most harm – quotas are designed to inflate prices to protect American sugar by prohibiting cheaper foreign products to compete in the U.S. market. A 2006 study by the International Trade Administration reported that for every job saved by sugar quotas, three jobs were lost to manufacturing as companies moved to countries like Canada and Mexico where sugar can be purchased at one-half or one-third the price of that in the United States. As a result, American companies have to pay extra for sugar their international competitors get at a much better rate, or stop using sugar to maintain a competitive edge. If you’ve traveled internationally and noticed your Coca-cola tastes far better abroad that’s why – in the United States Coke is made from high-fructose corn syrup. Everywhere else, it’s made from sugar.
Taxpayers, then, are getting hit twice by failed sugar protectionist policies – subsidizing the farming and especially the sugar industry costs taxpayers billions while quotas cause prices to skyrocket and forces consumers to pay hugely inflated prices; in the United States sugar sells for 56 cents a pound while the international market price is nearly a third of that – 23 cents. If the Obama Administration was truly concerned about the state of the nation’s economy, it would stop trumpeting protectionist policies that have, for years, been used as misguided political artillery for creating American jobs. Forcing taxpayers to “Buy American” or to buy American sugar is an unsustainable status quo and the United States should not be forced to learn that lesson more than once.