Thursday, June 30, 2005

CAFTA, sugar & Louisiana

The Central American Free Trade Agreement overcame a significant hurdle in the U.S. Senate on Wednesday. The full Senate could vote on it today. The U.S. House Committee on Ways and Means would then get it. On the subject of CAFTA and sugar politics, in its June 18th edition, The Economist (subscription required) published a piece titled “The sugar conundrum,” noting, in part: “In economic terms it is hard to see what all the fuss is about. Although CAFTA is important for Central Americans, whose main hope is for increased American investment, it will have only a small effect on America's economy. The combined output of the CAFTA countries is around $85 billion, about the size of the economy of Nevada. America already allows into its market almost 80% of these countries' exports tariff-free. And CAFTA's additional opening of America's most protected industries, such as sugar, is tiny. “In truth, CAFTA's significance is not its substance but what it symbolises for both supporters and opponents. The sugar lobby regards any increase in access for Central American sugar as a first step towards dismantling the defences that sustain this molly-coddled industry. Hence the huge pressure on congressmen from sugar areas, many of whom are usually free-trade Republicans, to vote against the agreement.” Some recent history on the issue here and here. Did you know? The American Sugar Cane League is headquartered in Louisiana. Here is the U.S. Government fact sheet on benefits accruing to Louisiana farmers with final approval of CAFTA. Finally, see my post from June 25 about Tom Friedman’s new book -- a book that implicitly presents a solid argument against the American tendency toward protectionism...