September 07, 2007

US Farm Bill Threatens Canadian Sugar Industry

TORONTO – On July 27th, the US House of Representatives passed a version of the Farm Bill that would impose further restrictions on Canada–US sugar trade. In the fall, the Senate will issue its own version of the bill. The two houses must then negotiate a compromise.

“The Canadian sugar industry is watching this process very closely” says Sandra Marsden, President of the Canadian Sugar Institute. “Proposed amendments to US sugar policy will shut down Canadian exports of beet thick juice and restrictive quota administration rules will limit Canadian refined sugar exports to the WTO minimum.”

Sugar beet thick juice is an in-process form of sugar which is eligible to enter the US free of any quantitative restrictions. However, the US sugar industry has lobbied against thick juice imports and the House version of the Farm Bill contains provisions that would effectively eliminate imports. “This is an international trade restriction disguised as a modification of domestic policy and runs counter to US trade commitments under the NAFTA and WTO”, stated Ms. Marsden. “The restrictions are aimed specifically at Canada, which is the sole exporter of thick juice to the US.”

The proposed Farm Bill also restricts imports of refined sugar. Under current regulations, if there is a supply shortage in the US, imports of raw and refined sugar can be increased to supply US consumers and food manufacturers. The new Farm Bill would effectively eliminate any refined sugar increase, limiting all future quota increases to raw cane sugar. This discriminates against countries such as Canada who do not produce raw cane sugar.

These changes, along with an increase in the sugar loan rate and a sugar ethanol program, would make the US sugar program even more trade distorting at a time when all countries are working together to cut trade distorting subsidies and trade barriers through the WTO Doha round negotiations.

The Canadian sugar industry is calling on the Canadian government to oppose these changes in advance of Senate consideration of the Farm Bill.