U.S. SUGAR INDUSTRY EFFORTS TO INFLUENCE U.S. POSITIONS ON FREE TRADE AGREEMENTS JOHN FORRER DIANA TUSSIE MARISA DÍAZ-HENDERSON PATRICK FUNICIELLO KRISTEN JANCUK
AUGUST 11, 2005
U.S. SUGAR INDUSTRY EFFORTS TO INFLUENCE U.S. POSITIONS ON FREE TRADE AGREEMENTS
TABLE OF CONTENTS CO-AUTHORS........................................................................................................................... 1 EXECUTIVE SUMMARY ..........................................................................................................2 BACKGROUND .........................................................................................................................4 Sugar Production in Historical Context...................................................................................................4 U.S. Sugar Industry and Policy..................................................................................................................7 The Federal Support Program ................................................................................................................11
SUGAR AND FREE TRADE AGREEMENTS (FTAS) .......................................................... 14
Sugar in NAFTA, CAFTA, and the FTAA...........................................................................................14 U.S. Sugar Industry Opposition to the FTAs ......................................................................................19
U.S. SUGAR INDUSTRY EFFORTS TO INFLUENCE TRADE POLICY ............................ 25 Papers and Studies ....................................................................................................................................25 Lobbying and Campaign Contributions ................................................................................................27 Connections to Policymakers and Congressional Voting Records....................................................33 Other Efforts to Influence U.S. Sugar Trade Policy............................................................................38 The Senate Vote of June 30: Concessions and Sugar’s Response ....................................................39
THE GLOBAL CONTEXT ..................................................................................................... 43
Global Sugar Production and Ownership .............................................................................................43 Global Sugar Consumption .....................................................................................................................47 Global Sugar Prices...................................................................................................................................50 Sugar Trade and Sugar Policies ...............................................................................................................51
CONCLUSION ........................................................................................................................ 58 EPILOGUE:
THE HOUSE VOTE ON CAFTA................................................................... 61
NOTES .................................................................................................................................... 70 BIBLIOGRAPHY ..................................................................................................................... 74 ANNEXES ............................................................................................................................... 82 Annex 1: Total Value of Sugar Production by Selected WTO Members, 1995-2003 ....................82 Annex 2: Value of Total Agricultural Production as Notified in Selected WTO Members’ Domestic Support Notifications, 1995-2002 ......................................................................83 Annex 3: Main Private Sugar Companies Worldwide ........................................................................84 Annex 4: Major International Traders ...................................................................................................86 Annex 5: Sugar Industry Survey..............................................................................................................88 Annex 6: Sugar Industry Survey Results................................................................................................90
U.S. SUGAR INDUSTRY EFFORTS TO INFLUENCE U.S. POSITIONS ON FREE TRADE AGREEMENTS
TABLES Table 1: The U.S. Sugar Industry at a Glance, 2004 ............................................................................11 Table 2: Change in Price of Sugar and Sugar-Sweetened Products, 1996–2004 .............................21 Table 3: Top Ten Sugar Industry Campaign Contributors, 2004 Election Cycle ...........................29 Table 4: Top Ten Sugar Industry Campaign Contribution Recipients, 2004 Election Cycle ............................................................................................................................................30 Table 5: Sugar Industry Campaign Contributions to Senators, 2000-2004 Election Cycles..........31 Table 6: Sugar Industry Campaign Contributions to Senate Agriculture Committee Members, 2004 Election Cycle................................................................................................32 Table 7: Sugar Industry Campaign Contributions to the Sponsors of Senate Resolution 289 and House Resolution 510, 2004.....................................................................................33 Table 8: Sugar Industry Campaign Contributions to CAFTA Action Caucus Members, 2002-2004 ...................................................................................................................................36 Table 9: World Sugar Production and Consumption, 1999/2000 to 2004/2005 (million metric tons) ................................................................................................................................50 Table 10: Top Ten Sugar Industry Campaign Contribution Recipients, 2004 Election Cycle, with CAFTA Vote ..........................................................................................................61 Table 11: Sugar Industry Campaign Contributions to Senators, 2000-2004 Election Cycles, with CAFTA Vote.........................................................................................................63 Table 12: Sugar Industry Campaign Contributions to Senate Agriculture Committee Members, 2004 Election Cycle, with CAFTA Vote ..............................................................64 Table 13: Sugar Industry Campaign Contributions to the Sponsors of Senate Resolution 289 and House Resolution 510, 2004, with CAFTA Vote ...................................................65 Table 14 : Sugar Industry Campaign Contributions to CAFTA Action Caucus Members, 2002-2004, with CAFTA Vote..................................................................................................66
FIGURES Figure 1: Major Country Producers of Sugar, 2003-2004 (metric tons)............................................44 Figure 2: Sugar Consumption, 1961–2003 (million metric tons) .......................................................48 Figure 3: Major Sugar Consuming Countries, 2003-04 (metric tons) ...............................................48 Figure 4: Annual Average of the International Sugar Agreement Daily Price of Sugar, 1961-2003 (U.S. cents/lb.) .....................................................................................................51 Figure 5: The Ten Largest Sugar Exporters, 2004-05 (metric tons)..................................................52 Figure 6: The Ten Largest Sugar Importers, 2004-05 (metric tons)..................................................53 Figure 7: Major Country Producers of Sugar, 2003-2004 (metric tons), with CAFTA Countries Included as One Unit.....................................................................................................................68
U.S. SUGAR INDUSTRY EFFORTS TO INFLUENCE U.S. POSITIONS ON FREE TRADE AGREEMENTS
EXECUTIVE SUMMARY Sugar as a commodity has had a long, nearly uninterrupted, run of protection in many countries, especially the United States, Japan and the European Union. Initially protected in the United States and Europe as an infant industry, sugar beet production had outstripped sugarcane production by the outset of the 20th century in many countries. The sugar industry has been successful at convincing successive U.S. governments to continue a variety of price support strategies in an effort to limit the import of more cheaply produced cane sugar, which, for the most part, comes from developing countries. Relative to other traditionally protected commodities, such as steel, cotton, peanuts, and textiles, in stating its case on Capitol Hill and in the media, sugar seems to be one step ahead of both lobbyists for other agricultural commodities and proponents of trade liberalization, targeting sympathetic politicians and winning exclusions, side agreements, and loopholes in a string of ostensibly comprehensive free trade agreements. This report documents the historical trajectory and current activities of the sugar industry as CAFTA trade negotiations proceed on Capitol Hill and are covered in the media. Drawing from examples of recent trade agreements such as NAFTA and the U.S.-Australia Free Trade Agreement, it identifies some of the patterns and reveals the strategies of arguments that have been employed by members of the sugar industry lobby, assesses these strategies based on their relative successes or failures, and suggests what level of tolerance might exist in the near future vis-à-vis the continued acceptance of the exclusion of sugar from trade agreements. This report describes efforts by the U.S. sugar industry to influence U.S. policy on Free Trade Agreements (FTAs) in the last 5-10 years, including tracking money spent on lobbying, identifying and summarizing papers and studies by the industry to support its position, and providing a description of the industry’s connections to policymakers. After a summary of the history of the U.S. industry and a report on its current structure and the lobbying activities of its members, this paper includes a detailed description of the global structure of the sugar industry in an effort to clarify the motivation behind U.S. sugar’s claims of global market distortion and provide additional information about what drives global sugar prices and trade flows. This report concludes with an epilogue that covers aspects of the
U.S. SUGAR INDUSTRY EFFORTS TO INFLUENCE U.S. POSITIONS ON FREE TRADE AGREEMENTS
recent passage of CAFTA by the U.S. Senate and House of Representatives in an extremely close vote in an attempt to identify any relationships between the targeting of sugar industry donations and how certain individuals voted. Based on this history and description of the current structure of the global sugar industry and the focus on its U.S. structure and lobbying patterns, an informed prediction about future lobbying successes and failures can be made with regard to U.S. sugar and trade agreements. In the run-up to the Congressional votes following President Bush’s signing of the CAFTA agreement, it was consistently reported that there was insufficient support for the CAFTA-DR in the U.S. Congress up until the days preceding the actual vote, and sugar was often held up as the major obstacle to its passage and—by extension—passage of the FTAA and future FTAs. The concessions promised to sugar producers to soften the potentially negative impact of increased sugar imports under CAFTA-DR, though interpreted by some as yet another encouraging victory for the sugar lobby, have already been met with greater resistance than in negotiations for other trade agreements from a countervailing lobby composed of sugar-using industries, government watchdog groups who track spending activities, and environmental activists. For this reason, sugar, which was at least partially successful in its attempt to reduce what it claimed would be CAFTA’s negative impact on the industry, is unlikely to achieve such victories in future trade agreements.
U.S. SUGAR INDUSTRY EFFORTS TO INFLUENCE U.S. POSITIONS ON FREE TRADE AGREEMENTS
CO-AUTHORS John Forrer is the Director of the George Washington University Center for the Study of Globalization in Washington, D.C. He holds a Ph.D. in Public Administration from the George Washington University. Diana Tussie is a Senior Research Fellow in International Relations at FLACSO Argentina . She directs the Latin American Trade Network. She has a Ph.D. from the London School of Economics. Marisa DĂaz-Henderson is a member of the Latin American Trade Network and an Economic Affairs Officer with the United Nations Conference on Trade and Development Virtual Institute, Information and Training Branch in Geneva, Switzerland. Patrick Funiciello is a Research Assistant at the George Washington University Center for the Study of Globalization in Washington, D.C. Kristen Jancuk is a Research Assistant at the George Washington University Center for the Study of Globalization in Washington, D.C.
U.S. SUGAR INDUSTRY EFFORTS TO INFLUENCE U.S. POSITIONS ON FREE TRADE AGREEMENTS