Quotas and the High Price of Sugar

By August 24, 2009Trade

The Wall Street Journal checks in on the Obama Administration’s trade policy and finds it unresponsive to consumers, protecting domestic sugar growers by holding import quotas steady and allowing sugar prices to rise. Earlier this month, food companies and business groups sent a letter to Agriculture Secretary Vilsack asking for a lift of the quotas, arguing that without the increased supply it would bring, “[Consumers] will pay higher prices, food manufacturing jobs will be at risk and trading patterns will be distorted.”

So far, nada. From the WSJ editorial, August 22, “Sugar Land“:

Challenging the status quo may be tough for President Obama, but a commitment to embrace standards of free trade early in his Presidency would be a boon to U.S. trade leadership. Big Sugar has long been the recipient of one of Washington’s most destructive policies, and the continued price manipulation has no place in a recession. President Obama should increase the quotas and end American sugar’s sweet deal.

See also The Washington Post’s Sunday editorial, “Sugar Shock.”

To be sure, the various sugar programs don’t involve the huge direct outlays of taxpayer money that other farm supports do. In a way, though, they’re even worse, since the blatant protectionism operates as a non-transparent tax on every product that uses sugar as an input. Free trade in sugar would bring short-term disruptions for domestic refineries and the growers who own them but, ultimately, greater efficiency and fairness for U.S. consumers and our trading partners. Alas, we’re probably stuck with the status quo — and the wasteful inter-industry political battles it engenders — at least until Congress writes a new farm bill about four years from now. Something to think about next time you bite into a candy bar.

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