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Changing the U.S. Sugar Program into a Standard Crop Program: Consequences Under NAFTA and Doha

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Author Info

  • Abler, David
  • Beghin, John C.
  • Blandford, David
  • Elobeid, Amani

Abstract

We analyze the impact of continuing the existing US sugar program, replacing it with a standard program, and implementing the standard program with multilateral trade liberalization. Under NAFTA, duty-free sugar imports from Mexico could undermine the program's ability to operate on a "no-cost" basis to US taxpayers as large public stocks of sugar could accumulate. The replacement of the current sugar program by one similar to other major US crop programs would solve the problem of potential stock accumulation, accommodate further trade liberalization under a new WTO and future bilateral trade agreements, but would induce significant fiscal outlays. Our analysis of recent WTO proposals suggests that a WTO agreement is unlikely to impose significant adjustment pressures on the US sugar market beyond those created by NAFTA. The adoption of a standard program would make it easier for the US to meet its commitments under a new WTO agreement in terms of reductions in trade-distorting amber-box support. Moving to a standard program would increase the costs of the program for taxpayers but would lower costs for sugar users. Given reasonable assumptions about program parameters, the principal program cost would likely be through direct payments rather than through countercyclical or loan-deficiency payments.

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Bibliographic Info

Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 12764.

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Date of creation: 01 Mar 2008
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Publication status: Published in Review of Agricultural Economics, Spring 2008, vol. 30 no. 1, pp. 82-102
Handle: RePEc:isu:genres:12764

Contact details of provider:
Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
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Web page: http://www.econ.iastate.edu
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Cited by:
  1. Beghin, John C. & Jensen, Helen H., 2008. "Farm Policies and Added Sugars in US Diets," Staff General Research Papers 12872, Iowa State University, Department of Economics.
  2. Fabiosa, Jacinto F. & Beghin, John C. & Dong, Fengxia & Elobeid, Amani & Tokgoz, Simla & Yu, Tun-Hsiang, 2010. "The Global Bioenergy Expansion: How Large Are the Food−Fuel Trade-Offs?," Staff General Research Papers 31603, Iowa State University, Department of Economics.
  3. Meade, Birgit Gisela Saager & Grant, Jason H. & Regmi, Anita, 2010. "Trade and Welfare Impacts of Partial Liberalization of U.S. Sugar TRQs: The Application of a PE/GE Modeling Approach," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61657, Agricultural and Applied Economics Association.

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