For two years, U.S. sugar producers have pushed for a multilateral solution to the global sugar subsidies that have wrecked the global market.
Under this plan, known as the Zero-for-Zero sugar policy, sugar producers around the world would eliminate sugar subsidies and market-distorting policies so that a free market can form. And the World Trade Organization (WTO) is the logical venue for such reforms to be accomplished.
Well, it looks like Brazil’s sugar producers are preparing to hold some of the worst sugar subsidizers accountable before the WTO. According to a May 20 Reuters article:
- Brazilian sugarcane producers are gathering evidence to persuade their government to launch a trade case against India and Thailand over subsidies, highlighting growing global trade tensions stoked by the plunge in commodity prices.
Eduardo Leão, executive director of the Brazilian cane industry association Unica, said the group hired an international law firm to dig into the subsidy programs, which they estimate could cost the South American country $1.2 billion a year in lost revenue.
“We are determined to challenge both countries,” said Leão. “Our role now is to deepen our analysis and convince the government that we are getting hammered by these subsidies.”
Brazil, the world’s largest sugar exporter, has brought questions about incentives for Thai and Indian sugarcane producers to the Agricultural Committee of the World Trade Organization. The country has grown more concerned about those programs at a time when global sugar prices are at six-year lows.
Of course, exposing India and Thailand’s subsidies is only part of the equation. The global sugar community should also be talking about how to eliminate Brazil’s $2.5 billion a year in subsidies, which were outlined in this 2013 report commissioned by the U.S. sugar industry.
These subsidies have helped make Brazil the OPEC of the world sugar market. And amazingly the report doesn’t even include Brazil’s numerous bailout packages or currency devaluation that have occurred recently.
If we are to ever have a free global sugar market that reflects production costs, international sugar producers need to stop simply pointing the finger and start looking in the mirror. All sugar policies, including U.S. policy, should be simultaneously eliminated.
And because no country would ever be willing to make such a sacrifice unilaterally, the Zero-for-Zero sugar policy is the common-sense pathway to a free market.