Agriculture Update
December 15, 2009
by: John Frydenlund

Government WasteWatch, Winter 2009

Sugar Lobby Pushing to Undo NAFTA

In a document titled “Mexican and U.S. Sugar Industry Recommendations to the U.S. and Mexican Governments to Make NAFTA Work Better,” the sugar lobby has advocated a regime of managed trade in sweeteners that would undermine the North American Free Trade Agreement (NAFTA), lead to inadequate supplies in the U.S. sugar market and encourage copycat initiatives that would harm job creation in the U.S. export sector.
 
If accepted by the U.S. and Mexican governments, these proposals would restrict Mexico’s ability to import sugar to this country, leaving U.S. suppliers in worse condition than they are at present.  Mexican sugar would be diverted back into its domestic market, reducing the demand for U.S. high fructose corn syrup, for which sugar is a substitute.  By almost completely eliminating the re-export trade in refined sugar, this would reduce employment in both the U.S. and Mexico.  The proposal would also incite additional demands from commodity groups in Mexico which would view the sugar precedent as justifying calls for new restraints on competitive U.S. exports/  This would represent a virtual undoing of NAFTA.
 
The proposal would create a biased advisory commission whose private-sector members would represent only the interests of the companies that sell sugar, not those of consumers, sugar-using industries, non-sugar businesses, workers or taxpayers.  The sugar lobby already benefits from a highly restrictive import quota which, according to the Government Accountability Office, costs U.S. consumers as much as $1.9 billion annually.  There is also a new program, created by the 2008 Farm Bill, that requires the federal government to buy up surplus sugar and sell it at a loss to ethanol plants.  According to the Congressional Budget Office, this program will cost taxpayers $992 million over the next 10 years.
 
This recent sugar lobby proposal is similar to one pushed for during the closing stages of the 2008 Farm Bill.  Congress rejected the proposal at that time.  The Obama Administration needs to reject it now.

More Attempts to Restrict Trade

Legislation is being pushed by the dairy lobby that would restrict the importation of Milk Protein Concentrates (MPCs), increasing the cost of a myriad of food products, such as baby food.  S 1542, sponsored by Sen. Charles Schumer (D-N.Y.) has 14 cosponsors and the companion legislation, H.R. 3674, sponsored by Rep. Peter Welch (D-Vt.) has 18 cosponsors. 
 
The Congressional Research Service, in a September 30, 2009, report entitled “Proposed Import Restrictions on Milk Protein Concentrates (MPCs),” concluded that enactment of this legislation “likely would entail the United States entering into compensation negotiations with World Trade Organization (WTO) member countries that are major suppliers of MPCs to the U.S. market.”  The report estimates that the aggregate amount of this compensation could be $500 million.  The report also suggests that imposing new import restrictions would have a relatively small impact on U.S. farm milk prices, which means that the import restrictions wouldn’t benefit those they are supposed to help.
 
The MPCs legislation should remain where it is – stuck in committee with no action being taken.