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Another NAFTA Story

  • A sweet deal for Mexicans has left a bitter taste in the mouths of American farmers.
By P. Samuel Foner

The North American Free Trade Agreement (NAFTA) is the culprit, according to American sugarbeet farmers, in a congressional battle to end price supports and subsidies to the industry.

During May, the last month for which figures were available, the government had to buy 150,000 tons of surplus sugar at a cost of $60 million to cover growers' minimum price guarantees.

That led to calls in Congress to eliminate the federal sugar program, a mixture of loans, price guarantees and import quotas designed to soften economic blows on sugar farmers.

Adding weight to the argument to eliminate the subsidies was a report from the General Accounting Office (GAO), Congress' investigative arm, that concluded the program cost sugar refiners, food manufacturers and consumers about $1.9 billion in 1998.

Rep. George Miller (D-Calif.), an opponent of the sugar program, told his colleagues: "The GAO has identified a clear example of corporate welfare that Congress has the power to stop"


In 1998, the GAO said, producers received $1 billion from the sugar program: 70 percent to beet growers in northern-tier states and California and 30 percent to cane producers, mainly in the South.

But sugar farmers insist that the problem is not with their industry but with imports.

"We don't need another teaspoon of sugar," said Luther Markwart, executive vice president of the American Sugarbeet Growers Association, which represents 12,000 growers in a dozen states. "It's a serious problem for our industry."

And, starting this fall, Mexican sugar growers can ship into the United States up to 10 times as much duty-free sugar as now permitted. Regulations that take effect Oct. 1 allow Mexico to raise its tariff-free sugar exports to 250,000 metric tons a year from 25,000.

This, despite the fact that American farmers already face a 25 percent drop in sugar prices this year to 21 cents a pound from 27 cents a year ago.

The increase was negotiated in 1993 as part NAFTA.

Allied with sugarbeet and cane farmers are consumer advocates and environmental groups.

"The industry has some very threatening storm clouds on the horizon," said Rep. Earl Pomeroy, a North Dakota Democrat on the House Agriculture Committee.

"Sugar beets have been by far the most successful crop grown by our farm ers," Pomeroy, who defends the current program, told reporters.


Jack Roney, an economist with the American Sugar Alliance, an umbrella group of farmers, processors and suppliers, said the U.S. trade representative's office had been trying to negotiate new terms with Mexico on duty-free imports.

"We already have disastrously low prices because of our current oversupply," he said. "We're hoping to work out an arrangement where their access is conditioned on our needs; so that when the demand is higher, they would export more sugar, and when it's lower, they would export less."

That would only be through 2008, when the two countries are to form a common sugar market. Tariffs on Mexican sugar, at 12 cents a pound now, are being phased out over the next eight years.

The trade representative's office confirmed that sugar trade discussions with Mexico had been in progress with the current administration, but would not discuss details.

However, with the election of a new president, deals with Mexico may have to be renegotiated regardless, Capitol Hill pundits opined.

About the author

"P. Samuel Foner" is anom-de-plume for Liberty Lobby founder Willis A. Carto.