Regulation and Protectionism under GATT: Case Studies in North American Agriculture

By Andrew Schmitz; Garth Coffin et al. | Go to book overview

quantity of imported sugar was substantial. The geographical distribution of domestic production was in transition, and perhaps most importantly, the corn sweetener industry was in its infancy. There was little or no resistance within the sugar industry to limiting imports and strong opposition to limiting domestic production given the rapidly changing production pattern. By 1990, however, the situation had changed dramatically. Imports of sugar had fallen precipitously, from over 5 million short tons raw value (s.t.r.v.) in 1979 to approximately 1.25 million s.t.r.v. in 1989. In addition, corn-derived sweeteners, primarily HFCS, had captured over half the domestic-caloric sweetener market and threatened to capture substantially more upon the imminent development of a crystalline HFCS. Reflecting this new reality, proposed 1990 legislation provided for a minimum level of imports (1.25 million s.t.r.v.), quotas on domestic production of cane and beet sugar if necessary and a 200,000 ton limit on marketing of crystalline fructose. These provisions preserved strong congressional support for the sugar program. The minimum-import provision extended the number of congressional supporters to include those representing refiners of imported cane.

In conclusion, national policy does not usually affect all regions of a country equally. Consequently, opposition or support for a proposed policy is likely to vary by region, and its adoption or rejection will depend on how these regions are represented in the policymaking body. In the United States, the result may be adoption or continuation of a policy that may impose a net cost on society at large, simply because a majority of legislators represent constituencies that enjoy a net benefit. This implies that limiting the access of special interest groups may not be as effective as other studies suggest because some policies, such as the sugar program, have a strong base of support, even in the absence of special interest groups. The geographical dispersion of sugar production and processing, corn production and HFCS processing will likely provide broad, regional backing for sugar support well into the future. It is important to keep in mind that the entire sweetener industry (not just sugar) is a significant part of the US agricultural sector.


Notes
1.
We do not infer that this model necessarily will apply to the new sugar program under the 1995 Farm Bill.
2.
A net domestic welfare loss would persist even if tariffs rather than quotas were employed as policy instruments although in this scenario the government would receive area c in the form of tariff revenues.
3.
See the papers by Schmitz ( 1995) and Schmitz and Vercammen ( 1995).
4.
Since consumers typically outnumber producers and processors, equally weighting their welfare levels would appear to be irrational for a popularly

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