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

Author

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  • 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.

Suggested Citation

  • Abler, David & Beghin, John C. & Blandford, David & Elobeid, Amani, 2008. "Changing the U.S. Sugar Program into a Standard Crop Program: Consequences Under NAFTA and Doha," Staff General Research Papers Archive 12764, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:12764
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    Cited by:

    1. Beghin, John C. & Jensen, Helen H., 2008. "Farm policies and added sugars in US diets," Food Policy, Elsevier, vol. 33(6), pages 480-488, December.
    2. John C. Beghin & Amani Elobeid, 2015. "The Impact of the U.S. Sugar Program Redux," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 37(1), pages 1-33.
    3. Whistance, Jarrett & Payen, Andrick & Thompson, Wyatt, 2015. "Suspension Agreements and Antidumping/Countervailing Duties: US-Mexico Sugar Markets and the Effects of Alternative Trade Policies," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205550, Agricultural and Applied Economics Association.
    4. 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.
    5. Troy G. Schmitz, 2018. "Impact of the 2014 Suspension Agreement on sugar between the United States and Mexico," Agricultural Economics, International Association of Agricultural Economists, vol. 49(1), pages 55-69, January.
    6. Schmitz, Troy G. & Lewis, Karen E., 2015. "Impact of NAFTA on U.S. and Mexican Sugar Markets," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 40(3), pages 1-18, September.
    7. 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 Archive 31603, Iowa State University, Department of Economics.
    8. Carlos J. O. Trejo-Pech & Karen L. DeLong & Dayton M. Lambert & Vasileios Siokos, 2020. "The impact of US sugar prices on the financial performance of US sugar-using firms," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 8(1), pages 1-17, December.

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