Reforming international trade is essential for Biden admin. — and sugar should be a test case

For years, the US sugar industry has been hammered by a cascade of unfair trade practices around the world, with US producers competing against massively subsidized sugar industries in Brazil, India, Thailand, the European Union and elsewhere.

But the emerging policies of the nascent Biden administration give some hope to the sugar industry — and other sectors — that fairness could once and for all be instilled as a guiding principle at the World Trade Organization.

Katherine TaiKatherine TaiBalance/Sustainability — What’s next for winter highway travel? US dairy industry claims victory over Canada in trade pact dispute Biden’s muddled trade policy MORE, President BidenJoe BidenBiden says he didn’t ‘overpromise’ Finnish PM to promise ‘extremely tough’ sanctions if Russia invades UkraineThe new US Trade Representative, the administration’s top trade post, certainly presents herself as something of a WTO reformer. “We must do the hard work and secure the necessary reforms that allow the world to come together and face common threats like climate change, the COVID pandemic and a global economic downturn,” she said. told the Senate panel considering his nomination.

On the fate of sugar in particular, she said there was no immediate break with existing policy to counter these subsidies – certainly not until the WTO could be reformed. She added that “WTO rules need to be updated to reflect long-standing agricultural problems that have not been addressed under the current WTO structure. If confirmed, I will work with like-minded partners to ensure any new rules are consistent with national sugar goals in the United States.

The WTO trumpets its noble mission “to ensure that trade flows are as smooth, predictable and free as possible”. The reality is quite different from the glitzy WTO website with its declarations of fairness.

The Atlantic Council succinctly sums up the bipartisan, global beef against the WTO. “The World Trade Organization, the largest multilateral trade organization and the bedrock of the global trading system, has increasingly drawn the ire of the United States and other countries who view the organization as outdated and complacent as other countries are bending the rules to get ahead,” It said.

Sugar would be a powerful test case for the new administration to deal with a reformed WTO. This is because the global sugar market is highly dysfunctional, driven by production and trade distorting practices employed by almost all sugar-producing countries. Solving the sugar dysfunction would demonstrate the WTO’s seriousness about a return to fairness in the evaluation of international trade practices.

The US government’s response to foreign subsidies is interest-bearing loans to US farmers and import quotas to protect US consumers and farmers from a glut of subsidized sugar, thus operating at no cost to the taxpayer. This is not the ideal response from a free market perspective, but the magnitude of the foreign subsidy shear leaves little choice.

Other countries that hoped the Biden administration might temper this strict no-cost approach must have been disappointed when Tai told the Senate panel that “any reform I pursue regarding the global sugar market will be consistent with maintaining the current no-cost sugar policy in the United States. ”

Instead, what the administration should do is push through meaningful reforms at the WTO and then advocate for a so-called zero-for-zero policy, which would eliminate U.S. sugar quotas — but only in exchange of the end of foreign subsidies at all levels. Such reciprocity would allow prices to be based on real costs, and not distorted by tariffs and government subsidies.

The WTO claims for itself an honored role among nations, comfortably ensconced in picturesque Geneva and surrounded by the postcard-perfect Jura Mountains, where it is “the only international organization dealing with global rules of trade”.

“By lowering trade barriers through negotiations between member governments”, he put, “the WTO system also removes other barriers between people and trading economies”.

Successfully coercing other nations to give up their sugar subsidies once and for all would put the organization in good stead on what is now an ill-deserved job description.

Gerard Scimeca is an attorney and co-founder of CASE, Consumer Action for a Strong Economy, a consumer advocacy organization focused on the free market.