http://www.reuters.com/newsArticle.jhtml?type=reutersEdge&storyID=8547735America's sugar industry is taking on the U.S. government in a fight over a trade pact with central America -- and the betting is that the Bush administration will blink first.
Sugar, with its massive lobbying power, is not quite David taking on Goliath. But it is one of the smaller corners of U.S. agriculture, forecast to generate $4 billion in cash receipts against $222 billion for the farm industry overall in 2005.
The battle is over CAFTA, the U.S.-Central American Free Trade Agreement which may go to a vote in Congress soon. The pact would open up the tightly controlled U.S. sugar market to more imports from Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic.
"We see it as a life and death issue," said Jack Roney, policy director at the American Sugar Alliance (ASA). "Every ton of CAFTA sugar that we're forced to import is one ton less we can produce. We are already holding half a million tons off the market and storing it at our expense."
Washington has been riveted by the rare sight of the agricultural community falling out among itself -- corn, livestock and some textile producers have all backed CAFTA -- as well as by the warnings rumbling down from some top Republicans who until now were allies of the sugar industry.
TIP OF THE ICEBERG
The battle goes beyond the implications of one trade deal.
"CAFTA is the tip of the iceberg," Roney said. Some 21 other sugar exporting nations are in line for similar trade pacts with the United States, he said.
"Our fear is that if CAFTA passes, these other countries will demand and expect no less than what we gave to the CAFTA countries," he said. "Then we are on a path to handing over most of the U.S. sugar market to subsidized farm producers."
Some economists say the current federal sugar program, comprising loans to processors to support the U.S. price and a tariff-rate quota import system, is overdue for an overhaul.
"By U.S. standards, sugar is the most highly protected agricultural industry," said Gary Hufbauer, senior fellow at the Institute for International Economics in Washington.
