WASHINGTON—In testimony delivered to the U.S. International Trade Commission (ITC) today, U.S. sugar producers encouraged the agency to publicly note the positive effect U.S. sugar policy has on the economy.
The American Sugar Alliance’s (ASA) testimony cited low U.S. sugar prices, the 142,000 jobs supported by the U.S. industry, growth in the country’s candy business, and recent economic events in Europe’s sugar industry as justification.
Every two years the ITC investigates the impact U.S. sugar import restraints have on the economy, and it has systematically moved in the direction of showing no economic harm. The most recent ITC calculation, released in 2011, noted a negligible $49 million loss – down 96 percent since 2004.
“The ITC, in its last several updates, has moved encouragingly toward the ASA’s long-held position that U.S. sugar policy and import restraints provide a net benefit to the U.S. economy, and not a net cost,” explained ASA economist Jack Roney, who testified on the industry’s behalf.
ASA believes that if the ITC properly accounts for all the jobs tied to U.S. sugar production and acknowledges that global sugar prices are at or above U.S. sugar prices, then showing an economic benefit from sugar policy will be likely.
The spread between U.S. prices and the heavily subsidized world dump sugar market have long been ITC’s reason for showing any economic harm. However, since the last ITC update, U.S. sugar prices have fallen sharply and have converged with dump market prices.
Roney further explained that even sugar policy’s biggest critics – large confectioners – have expanded production in recent years and are booking impressive profit margins. These food manufacturers are currently pocketing falling ingredient costs to further boost profits instead of passing along savings to consumers, he noted.
ITC was encouraged to look to Europe for proof of the economic damage that occurs when a country becomes much more dependent on imports. “[EU sugar] production fell by 20 percent, 83 mills closed, and 120,000 jobs were lost” after it “reformed its sugar regime in 2006,” according to ASA. In addition, EU sugar prices rose, food makers had trouble sourcing sugar, and food prices climbed.
Roney also noted that world average retail sugar prices are 14 percent higher than U.S. prices as further proof that American consumers benefit from U.S. sugar policy.
“As a result of these factors and experiences, we urge the ITC to find there would be a net cost to U.S. society absent U.S. import restraints, rather than a net benefit,” Roney concluded.