Sugar High: Trade Deal Benefits U.S., Panama

American and Panamanian trade negotiators reached a deal on sugar access in a Panama-U.S. trade agreement late on Monday night.

The deal allows for 7,000 metric tons of additional duty free access to the U.S. sugar market and grants duty free access for U.S. sugar shipments into Panama—a market that has historically been closed.

Even though the U.S. sugar market is already oversupplied with unneeded imports, initial reaction within the U.S. sugar industry to this trade deal has been positive.

That’s because U.S. trade negotiators worked hard to turn unreasonable Panamanian requests into a fair sugar agreement.  7,000 tons is a manageable amount and will not send shockwaves through our market like the lopsided deals with Mexico and Central America in the past.

Despite our acceptance of the Panama deal, it is important to note that U.S. producers aren’t welcoming future bilateral trade deals with open arms.  These deals carve up America’s market and do nothing to address the subsidies and trade distorting practices that are so common among foreign sugar producers.

U.S. sugar producers have long advocated for worldwide free trade on a sugar market that is free of subsidies, and we continue to believe that the World Trade Organization—not individual trade deals—provides the best avenue for achieving such reforms.

It’s also important to note the fallacy of the common misperception that the U.S. sugar market is a closed one.  America is the world’s second largest sugar importer and we buy sugar from 41 countries, 38 of which are considered developing nations.

Take Panama for example.  Even before this new trade deal, Panama could send three-fourths of its sugar exports, or at least 30,538 tons, to America duty free each year.

And that sugar receives a price that is more stable than developing countries would receive on the world dump market, where prices are barely half the world average cost of production.

No wonder these poor countries are strong supporters of America’s current no-cost sugar program.  Just like U.S. sugar producers, they want the existing system to continue in the next Farm Bill.