Alliance for Sugar Trade Reform Makes Mockery of WTO by Demanding U.S. Access, Refusing to Eliminate Subsidies, According to American Sugar Alliance.

SEATTLE--(BUSINESS WIRE)--Nov. 28, 1999--

American Sugar Farmers Welcome Fair Global Competition

The following was announced today by The American Sugar Allance:

"The Global Alliance for Sugar Trade Reform (GASTR), a collection of foreign sugar producing countries backed by multi-national food corporations, is making a mockery of the World Trade Organization talks in Seattle by refusing to address the elaborate scheme of subsidies its governments grant their farmers," Jack Roney, senior economist of the American Sugar Alliance, said today.

"GASTR is demanding the U.S. unilaterally remove border restrictions that safeguard American Sugar farmers against the predatory trade practices of foreign governments," Roney said, "without agreeing to eliminate such things as export subsidies, state trading enterprises, government subsidized loans, payments and infrastructure subsidies that currently exist in one form or another in GASTR' countries. They also are unwilling to address important labor and environmental issues which are part of the spirit of the WTO negotiations."

GASTR is led by Australia, which has import restrictions on a number of other agricultural products while claiming it endorses free trade, and joined by Brazil and Thailand. They are being supported by candy and other sugar using manufacturers who are trying to increase their profit margins at the expense of American farm jobs.

Roney said GASTR has launched a massive press attack on American Sugar farmers, handing out its own studies that promise lower prices and free trade if the U.S. Would unilaterally drop its sugar policy. "They are even making outrageous claims that the success of the entire World Trade Organization negotiations over the next several years depends on putting American sugar farmers out of business."

Unlike GASTR, American sugar farmers support the concept of global free trade, completely free of any type of government interference in the market place. Over the last decade, the U.S. has lowered tariffs and removed all domestic government controls on sugar production that kept prices stable. "We are the third largest importer of sugar in the world," Roney said. "Sugar was the first commodity to endorse the goal of completely eliminating government trade barriers in the Uruguay Round of the trade talks in 1986.

"Because of our efficiency, American sugar farmers would welcome the opportunity to compete with foreign farmers. Our farming practices and technology enable us to be among the most efficient sugar producers in the world. Unfortunately, the extreme distortion of the world sugar markets makes any such free trade competition impossible," Roney said. "Until the trade distorting practices of countries such as the European union, Brazil, and Australia are eliminated, the United States must retain the minimal sugar policy now in place to prevent foreign subsidized 'dump market' sugar from displacing American production.

"As long as foreign governments heavily subsidize their sugar farmers and allow those farmers to overproduce and dump surplus sugar on the world market at prices far below the cost of producing the sugar, the U.S. must stand firm. Dumping is illegal in the trade of manufactured goods for obvious reasons. The same principles must apply to agriculture."

As the WTO negotiations begin in Seattle, sugar farmers have pledges of support from top U.S. negotiators. Secretary of Agriculture Dan Glickman said recently, "I have told sugar growers and producers...that we would not sacrifice the sugar growers or any other parts of agriculture at the round, and certainly they would not be treated in any kind of disproportionately negative way."

"We are concerned," Roney said, "by the elaborate and unprecedented effort to single out sugar as these negotiations begin. Clearly our opponents hope to drive a wedge between our farmers and the rest of American agriculture. We believe that other farmers as well as our negotiators will see through this scheme and reject it."

The American Sugar Alliance is the national coalition of the growers, processors, and refiners of sugarbeets, sugar cane and corn for sweetener.

American Sugar Alliance

Additional Background

The United States is the fourth largest sugar producer in the world, growing and processing sugar from cane or beets in 17 states and providing 420,000 American jobs and adding $26 billion to the economy each year. Even with some of the world's highest government-imposed costs for labor and environment protection, U.S. Producers are among the world's most efficient.

The countries demanding access to U.S. markets are the beneficiaries of massive government programs in their own countries. European Union countries, for instance, are much higher cost producers than the U.S. And they enjoy receiving more than 40% more for their sugar in government subsidies. This encourages and allows EU farmers to overproduce each year, and the surplus is dumped on the world market, bringing just a few cents a pound. That dump price is far below the cost to produce such sugar.

In Brazil, government subsidies are more subtle. Brazilian sugar farmers have received massive government subsidies as they produced alcohol from sugar cane to be used as fuel for automobiles. After a massive government build-up of their sugar industry, the alcohol is no longer needed and mostly sugar is produced in their factories. Yet, subsidies remain. There are also serious social issues in Brazil, including child labor and lax environmental protections that put countries with higher standards like the U.S. At a serious cost disadvantage. It is no wonder that many countries are opposed to even having environment and labor be a part of the overall trade negotiations.

Australia, who protests most loudly and often at U.S. sugar policy, has a virtual state-sanctioned monopoly in sugar. The Queensland Sugar Corporation is a state trading enterprise in Australia that controls all buying and selling of sugar. Their government also subsidizes equipment and transportation for the sugar industry and then has the nerve to call for American adherence to free trade!

American Sugar Alliance

Negotiating Position

U.S. trade negotiators must strongly resist efforts by these countries to force further concessions from our government so that their farmers can achieve greater access to U.S. Markets without first addressing their own government intervention in the market place.

We believe there is enormous potential for progress toward achieving truly global free trade in the Seattle Ministerial. However, we do not support free trade at any cost, and neither would most Americans. The movement toward free trade must be multilateral on the United States' part. Trade must be fair and equitable--otherwise we risk transforming the United States' Farm Belt into a Rust Belt.

In that spirit we urge adoption of the following: -0-

-- Export Subsidies.State Trading Enterprises: All export subsidies,
the most trade distorting of all practices, must be eliminated along
with state trading enterprises that were ignored in earlier trade
negotiations.

-- Compliance with past agreements: U.S. agriculture, including sugar,
has fully complied with its commitments under the last trade round
(Uruguay Round) and NAFTA.  Under the 1996 Farm Bill, the U.S. made
further reductions in its concessions from foreign countries.  Other
countries must meet their commitments to past agreements before the U.S.
Makes further concessions.

-- Catch-up: the United States must not reduce its support for
agriculture, particularly import sensitive crops such as sugar, until
other countries have reduced their support programs to our level.

-- Labor and Environmental Standards: Nearly 3/4 of the world's sugar
is produced in developing countries. Sugar producers there are
indirectly subsidized by governments that imposed little or no
protections for workers or the environment. Rather than penalizing
countries that already meet high labor and environmental standards,
the next trade round should give incentives to those who don't. Global
trade should seek to raise standards around the world, rather than
force them to fall due forced price competition.

-- Negotiate Smart: Future tariff reductions should follow a flexible,
request/offer type of negotiating strategy rather than a rigid
across-the-board formula approach. A one-size fits-all trading policy
does not work with the enormous diversity and individual market needs
of many U.S. agricultural industries and commodities.