Sugar
today, Jam tomorrow?
And the role of the
Central American Free Trade Agreement
By
Jonathan
Power
TFF Associate
since 1991
Comments to JonatPower@aol.com
June 22, 2005
LONDON - There is no crop in the
world more political than sugar. And no moment in the
tenure of the Bush Administration when passing a trade
deal through Congress has been more important.
Tragically, the political power of the American sugar
lobby may well be sufficient to torpedo the ratification
of the Central American Free Trade Agreement, in many
ways the most important American trade arrangement of
recent years.
There is no free market in sugar-
everybody has a deal. For decades the Cuban economy leant
heavily on the over-the-market prices paid by the Soviet
Union.The Caribbean and African countries depend on
special favors granted by the European Community. For
long enough a number of Caribbean and Central American
countries have relied on preferential access to the U.S..
Nevertheless, the sugar producers- both southern cane
growers and temperate zone beet farmers - that the EU,
the U.S. and Japan most favor with one means of financial
support or another are their own, despite the fact over
the years this has cost tax payers and consumers a small
fortune. This government support has often pushed sugar
prices below the cost of production and, as with so much
other agricultural protectionism, has made it much more
difficult for farmers in Third World countries to grow
their way out of poverty. According to a new report by
Oxfam, agricultural subsidies total around $250 billion a
year, the same as they were in 1986 in real terms despite
all the talk about aiding the poorer countries with their
economic development. Indeed, as far as sugar is
concerned, the "sugar-daddy" agreements of the rich
countries have been, over the long run, more of a curse
than a blessing.
So why should one support the
Central American Free Trade Agreement? Because we must
view it as a short-term stepping-stone in the struggle
against rich country agricultural protectionism. Added to
that, it is the only deal presently on offer to the
Central Americans that will ensure that their
disadvantage doesn't worsen. It may even improve their
access to the American consumer- by a meager spoonful of
sugar per week, according to one U.S. government
official. (It will also help stave off the wrecking
effect of the recent surge of Chinese textiles' exports.)
Fortunately, for the future, we
have the growing political and legal muscle of the World
Trade Organization, (as well as the uncertain and hotly
debated prospects of the Doha Round discussions on a
broad reduction of protectionism in agriculture). In
April, responding to a well-argued legal case developed
and presented by the Brazilian government (with support
from Thailand and Australia), the international trade
body ordered the European Union to stop dumping
subsidized sugar in the global market place. It is only a
matter of time before the organization's guns are pointed
at U.S. sugar protectionism.
Already, we can see that the EU is
beginning to give way under the strain of defending the
undefendable. An internal European Commission study on
sugar surfaced today. It proposes that EU sugar
production and dumping be reduced, with a 39% cut in the
domestic sugar price. Italy would see its sugar growers
closing down and Irish, Portuguese, Greek, Spanish,
Danish, Finnish, Hungarian and Czech farmers would be
compelled to significantly lower production.
According to the report's figures
the benefit to Third World sugar exporters under these
reforms will far overshadow the benefits promised in such
schemes as the Central American Free Trade Agreement.
Nevertheless, the later is tangible, the law is written,
and it just needs the votes in Congress. Moreover, the EU
initiative could be torn apart and delayed by political
opposition, at least in the short term. If the sugar
lobby in Europe is not quite as powerful as its
counterpart in the U.S., where it is the single largest
donor among agricultural producers to political
campaigns, it still smacks a hefty punch.
The Group of Eight, the world's
leading industrial nations, will be holding its summit in
two weeks' time, chaired by the British prime minister,
Tony Blair. Blair wants to make the destiny of Africa and
the other very poor countries of the Third World one of
two central discussion points. By then the fate of the
Central American Free Trade Agreement should be known. If
Bush wins on that then America will be freer to give
support to other trade-improving initiatives that Blair
has up his sleeve. But if the too-powerful sugar lobby
can shoot down this agreement in Congress then we can be
sure that the prospects for the richer nations giving the
Third World a chance of pulling themselves up by their
own bootstraps is a less attainable goal than Mr. Blair
thinks.
Copyright © 2005 By
JONATHAN POWER
I can be reached by
phone +44 7785 351172 and e-mail: JonatPower@aol.com
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