1 / 19

Sponsored by American Sugar Alliance Stowe Mountain Lodge Stowe, Vermont August 1 –6, 2014

Sponsored by American Sugar Alliance Stowe Mountain Lodge Stowe, Vermont August 1 –6, 2014. www.sugaralliance.org/symposium. Global Free Trade in Sugar: Within Reach or Mirage? A Discussion. ProSunergy. 31 st International Sweetener Symposium, August 1 – 6, 2014.

xylia
Télécharger la présentation

Sponsored by American Sugar Alliance Stowe Mountain Lodge Stowe, Vermont August 1 –6, 2014

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Sponsored by American Sugar Alliance Stowe Mountain Lodge Stowe, Vermont August 1 –6, 2014 www.sugaralliance.org/symposium

  2. Global Free Trade in Sugar: Within Reach or Mirage? A Discussion ProSunergy 31st International Sweetener Symposium, August 1 – 6, 2014

  3. Global Free Trade in Sugar: Within Reach or Mirage? This Question Has Context: • NOT ONLY ABOUT SUGAR: one should not disconnect international trade issues for sugar from that of other goods, • For economists, “Free Trade” is an extension of “Free Markets” • Can “Free Trade” be fair? Can different business environments compete fairly? ProSunergy 31st International Sweetener Symposium, August 1 – 6, 2014

  4. Why Free Trade? “Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole. By stimulating industry, by rewarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically: while, by increasing the general mass of productions, it diffuses general benefit, and binds together, by one common tie of interest and intercourse, the universal society of nations throughout the civilized world.” David Ricardo, The Principles of PoliticalEconomy and Taxation, 1821 ProSunergy 31st International Sweetener Symposium, August 1 – 6, 2014

  5. Why Not Free Trade? “Free trade? Free trade! The call for free trade is as unavailing as the cry of a spoiled child, in its nurse's arms, for the moon, or the stars that glitter in the firmament of heaven. It never has existed, it never will exist. Trade implies, at least two parties. To be free, it should be fair, equal and reciprocal.” Henry Clay, "Defense of the American System“, 1832 ProSunergy 31st International Sweetener Symposium, August 1 – 6, 2014

  6. Free Trade is a Model • “Free Trade” is a model for international commerce … based upon the Free Market model for domestic commerce. • Both models work well … under assumptions. • However, if these assumptions are not fulfilled (at least in large part), the models do not work. In particular, to be efficient a single – international or domestic –market requires a single currency. ProSunergy 31st International Sweetener Symposium, August 1 – 6, 2014

  7. The Free Trade Model and History • Economics is not an experimental science but history offers economic policy lessons. • If Free Trade is so good, why did not one developed country develop through free trade? ProSunergy 31st International Sweetener Symposium, August 1 – 6, 2014

  8. The Free Trade Model and History A 1929 lesson: protectionism is bad • 1947 GATT – 1995 WTO: For the “substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis.” • Bretton Woods institutions: IMF / IBRD Till 1972, managed exchange rates: the absence of protectionism requires rules (think of inter-state commerce) ProSunergy 31st International Sweetener Symposium, August 1 – 6, 2014

  9. Free Trade & Fair Trade: Whose Rules? Competitive discrimination – favorable or unfavorable: • Fiscal & monetary policies • Labor law • Safety regulations • Security rules • Property law • Environmental law • Industry Support Systems ProSunergy 31st International Sweetener Symposium, August 1 – 6, 2014

  10. Sugar: A Glut of Support Systems Worldwide, the sugar industry is notorious for permanent and widespread domestic and trade “special treatment”: • State ownership • Tariffs • Managed prices (feedstock) • Soft loans • Preferential tax treatment • “Single desk” selling • Etc. ProSunergy 31st International Sweetener Symposium, August 1 – 6, 2014

  11. Sugar: A Glut of Support Systems … Source: LMC International, 2008 ProSunergy 31st International Sweetener Symposium, August 1 – 6, 2014

  12. … Keeps World Market Prices Below Cost Brazilavg. ProSunergy 31st International Sweetener Symposium, August 1 – 6, 2014

  13. Sugar Industry Support Trends Despite the Uruguay Round Agreement on Agriculture, for sugar (and for agriculture in general) we find: • Continued / increased support in many countries • Upward tariff adjustments • Reliance on support mechanisms outside UR disciplines • Reliance on trade partner passivity (WTO dispute settlement) • Unease at exchange rate disruptions ProSunergy 31st International Sweetener Symposium, August 1 – 6, 2014

  14. Sugar Industry Support Trends: Producers 65% of world exports are supplied by: • Brazil: • Soft loan increases: US$ 620 Mfor sugar innovation & US$ 2.5 B2014 credit line for the industry • Tax rebate system renewed (“REFIS 5”) • Thailand: government-induced switch from rice to sugarcane • India: • US$ 1 B in new 2014 soft loans for the mills • 2014 export subsidies (13% of world market price) • Government intention to increase import tariff from 15 to 40% ProSunergy 31st International Sweetener Symposium, August 1 – 6, 2014

  15. Sugar Industry Support Trends: Consumers In major importing areas: • China: • US$ 800/t subsidy for 3,8 Mt (“The mills were rejoicing”) • Government storage program / Import quotas • EU: R&D support for sugar beet / GMO rejection • Africa: • South Africa: in April, sugar tariff increased from 0 to 23% (US$ 106/t) • Mozambique, Kenya, Tanzania, … looking to increase tariffs ProSunergy 31st International Sweetener Symposium, August 1 – 6, 2014

  16. The ASA’s “Zero for Zero” Sugar Policy Proposal • The principle: • Once foreign subsidies that are distorting world prices are eradicated, U.S. sugar policy would be eliminated. • ASA Chairman Ryan Weston: • “Efforts to unilaterally disarm U.S. sugar policy before such changes materialize will do nothing to further free-market principles while leaving American consumers dependent on other countries for a vital food ingredient.” • “U.S. sugar farmers are efficient by world standards, and the only reason we need a policy is world market distortion.” ProSunergy 31st International Sweetener Symposium, August 1 – 6, 2014

  17. Free Trade Under Fire? Nails in the Coffin? • Between 2001 and 2008 alone, the Cairns Group found that India’s “total trade distorting support” to farmers had risen from $8.2 B to $37.6 B, while in China it rose from $320 M to $13.9 B. In the EU, the figure fell from $36.1 B in 2001 to $10.3 B in 2011 while in the US for the same years it fell from $21.5 B to $14.4 B. • The WTO has been unable to adopt the Trade Facilitation package agreed at Bali last December. India wants to breach its Uruguay Round commitments by stockpiling food staples at above-market prices for security purposes. ProSunergy 31st International Sweetener Symposium, August 1 – 6, 2014

  18. Global Free Trade in Sugar: Within Reach or Mirage? • A free market is not a market without rules. • Global free trade is a mirage: as long as global economic, fiscal and monetary policy coordination remains a dream, free trade will not be the equivalent of a free market. • International trade in sugar is especially far from fulfilling free market conditions: subsidies are rampant and unequal. ProSunergy 31st International Sweetener Symposium, August 1 – 6, 2014

  19. Thank you ProSunergy 31st International Sweetener Symposium, August 1 – 6, 2014

More Related