President Carter today announced a series of actions aimed at maintaining a viable domestic sugar industry. The President believes that in the long run, implementation of a workable International Sugar Agreement (ISA) provides the best means for achieving this end. In the interim the President has instructed the Secretary of Agriculture to institute an income support program for producers offering supplemental payments whenever the market price falls beneath 13.5 cents a pound.
At the same time, the President determined that import relief, in the form of import quotas recently recommended on March 17 by the U.S. International Trade Commission (USITC), would not be in the overall national economic interest, including that of both consumers and producers.
These actions were announced today by Ambassador Robert S. Strauss, the President's Special Representative for Trade Negotiations.
In the past year sugar prices have fallen sharply to a point less than the costs of production for many U.S. growers. Therefore, the President has instructed the Secretary of Agriculture to institute an income support program which would provide supplemental compensation to growers of up to 2 cents a pound for sales at market prices below 13.5 cents per pound. 13.5 cents is the estimated average break-even price for domestic sugar growers. This would be an interim measure, pending the negotiations and implementation of a new ISA and would not raise costs to consumers.
The President noted that the United States is actively participating in negotiations now underway in Geneva for an ISA, which if successful would provide long-term assurance of greater stability in world prices and supplies. Successful implementation of an ISA would make further consideration of unilateral measures by the United States unnecessary.
The President's decision is based on an interagency review of a report by the USITC, which found that imports were a substantial cause of a threat of serious injury to the domestic industry and recommended a 5-year import quota of 4.275 million short tons, raw value, for sugar imports, to be allocated among supplying countries.
The interagency review considered the USITC report on the basis of overall national economic interest criteria spelled out in the Trade Act of 1974.
The President determined that a remedy involving import restraints, achieved either through import quotas or tariff increases, would not be a desirable course of action. It would raise prices to consumers without the promise of offsetting price stabilization benefits. Import relief would also adversely affect the export earnings of a number of developing countries which depend on sugar exports for their economic growth and prosperity. The United States strongly believes that the economic development of these countries is in the mutual interest of themselves and the United States.
The President also directed the Special Trade Representative to continue to follow the sugar import situation closely and to advise him in consultation with the Secretary of Agriculture of any need for consideration of further actions.
In connection with his decision on the USITC report, the President also concurred with the determination of the Interagency Trade Policy Staff Committee (TPSC) that sugar will continue to receive duty-free treatment from eligible developing countries under the Generalized System of Preferences (GSP). A petition submitted to STR by the American Farm Bureau Federation, requesting that sugar be withdrawn from the list of GSP-eligible products, was therefore denied.
The TPSC found that imports of sugar under GSP account for a relatively small percentage ( 17 percent) of total sugar imports, and more importantly do not significantly affect the U.S. price level. Removal of sugar from GSP would also be contrary to the U.S. policy of encouraging mutually-beneficial development of the economies of less-developed nations. Major developing country suppliers of sugar exports to the United States have not been, and will not be, eligible for GSP under the provisions of the program which limit its benefits.