Foreign Subsidies Hurt American Farmers
As global trade continues to expand, it’s important to remember that “free trade” only works if it is “fair trade.” Trade is good for America when that trade is fair. Only when our farmers and other suppliers of goods and services compete on a truly level playing field with their foreign competitors can “free trade” become reality.
The Trump administration is highlighting the need to create that level playing field in our trade relations. Whether it’s reevaluating our nation’s stance on multilateral trade deals — by withdrawing from the Trans-Pacific Partnership (TPP) or renegotiating the North American Free Trade Agreement (NAFTA) with Canada and Mexico — truly “fair trade” remains the centerpiece of these efforts.
Regardless of one’s political affiliation, putting Americans first should always be the priority, especially on world trade.
That’s why there is grave concern about efforts in Congress that could hurt the agriculture industry and put thousands of American jobs at risk. The Sugar Policy Modernization Act (SPMA) would end the current U.S. sugar policy that protects American sugar farmers and refiners from unfair trade practices by other sugar-producing countries.
Subsidies have warped the world sugar market. American agricultural products are often competing against foreign companies whose prices are kept low through subsidies from their governments. This is a far cry from “free trade.”
The Thomas Jefferson Institute for Public Policy recently published a study on how current U.S. policy helps level the playing field for our sugar farmers and refiners. Through import duties, the American government fines foreign competitors that use government subsidies to lower their prices artificially. The study also lays out steps for reforming the policy that would lead to a freer international sugar market.
By offsetting through import duties the subsidies foreign governments give their own farmers, current U.S. sugar policy not only levels the playing field for American sugar producers, but also provides predictability to the market. What’s more, the Agriculture Department projects sugar policy to run a zero cost to the taxpayer for the next 10 years, just as it has in 15 of the last 16 years.
If all foreign governments were to eliminate their subsidies — as our study calls for — then the U.S. import fees would no longer be necessary. American sugar farmers could compete in a free and fair world market without U.S. imposed import fees on foreign sugar. In short, all subsidies should be eliminated. This is the approach found in legislation introduced by conservative Congressman Ted Yoho (R-FL). Yoho’s bill calls for the worldwide elimination of sugar subsidies, a so-called “zero-for-zero” policy.
If the proposed Sugar Policy Modernization Act is enacted without the elimination of foreign subsidies, it will put thousands of American farming jobs at risk. That’s antithetical to the “free trade” policies that our president has been working to implement.
Our country’s farmers work hard to ensure that food is always available to Americans. But that job will become more difficult if our Congress ends up supporting policies that give foreign competitors an unfair advantage. The current sugar policy makes sense, as does the effort to eliminate government subsidies in all sugar-producing countries.
Only if government subsidies become a thing of the past will our farmers compete on a truly level playing field. “Free trade” must mean “fair trade.”
Michael Thompson is the president of the Thomas Jefferson Institute for Public Policy. These views are his own and do not necessarily reflect those of the Thomas Jefferson Institute or its Board of Directors. Thompson can be reached at Mikethompson31@verizon.net.