A ‘zero-for-zero’ approach on sugar will lead to a freer market

In the current presidential campaign, trade has become a point of contention among dissatisfied voters in both the Democratic and Republican camps.

The perception seems to be that increased trade has had an overall negative effect on the American economy as a whole, and American workers in particular. Part of this fear stems from a belief that trade partners take advantage of our willingness to facilitate trade and/or decide to ignore the rules of trade agreements once they are made final.

{mosads}While there may be room to improve existing trade deals and those currently in various stages of negotiation, policymakers and average citizens alike would do well to understand that one truism remains: The free exchange of goods and services brings many economic benefits to the people of countries who promote a free market. The opposite of this is more government control, which virtually guarantees higher prices, lower quality and less opportunity for all.

But with trade barriers, subsidies and tariffs still in place around the world, often the question is one of how to achieve a free, or freer, marketplace that will help economies flourish. The world has benefited from being more interconnected — we see how the ripple effects of decisions in one country can affect others.

For example, when the U.S. government supports policies that harm the U.S. economy or stalls economic recovery, countries that depend on tourism shoulder a share of the pain. That is because when Americans worry about finding a job or paying past-due credit card bills, they aren’t vacationing, no matter how enticing the price. When we erect barriers to imports, or flood foreign markets with surpluses, or sign trade deals that favor just a couple of nations, there are ramifications throughout the international community.

We see this in the agriculture sector, a business that’s been central, for example, to poor Caribbean and Latin American countries long before tourism. But agriculture is becoming less lucrative as foreign governments manipulate global markets and artificially depress prices. Such is the case with sugar, a crop that has been grown by many tourist destinations for centuries. Unfortunately, huge exporters of sugar — namely Brazil, Thailand and India — pump billions a year into their sugar empires to fuel surpluses and gut global prices.

In fact, the litany of market-depressing government programs, which range from direct subsidy checks to government controlled prices, debt forgiveness and currency manipulation, have sent world sugar prices to just half of world average production costs. And the rise in sugar subsidization is only getting worse.

Countries with cash can fend off these foreign subsidies and usually create government programs of their own to protect domestic farmers. That is why the United States has a sugar policy. It is why Europe has one, too.

Europe and the United States also took steps within their sugar programs to protect poor developing nations by guaranteeing market share at a price that covered production costs. This helped countries that depended on Europe and the U.S. to buy their sugar.

That has not sat well with the subsidizing superpowers. Brazil, for example, sued Europe in international trade court in an effort to unravel EU sugar policy. Brazil won and that hurt Europe’s traditional foreign suppliers, who lost preferential access and favorable prices.

Jamaica’s sugar industry is now teetering on bankruptcy. St. Kitts and Nevis abandoned its centuries-old sugar industry altogether. As did Trinidad.

Now, foreign subsidizers and their allies in America are looking to unravel U.S. sugar policy — a move that will hit the 39 developing countries that get preferential access to this market.

Such a plan only rewards the world’s worst subsidizers for their bad actions. A much better strategy has been introduced by U.S. Representative Ted Yoho (R-Fla.). His plan, known as “zero for zero,” addresses foreign subsidies, then would eliminate U.S. sugar policy.

In other words, it attacks the root of the problem: government. And it does so in a way that tackles the issue of fairness and rules head-on, a viable approach given the current climate of anxiety around trade deals. But the long-term goal remains: If it is successful, the zero-for-zero approach will ultimately facilitate a freer market, benefiting American workers and consumers.

Lopez is president of the Hispanic Leadership Fund, an advocacy organization dedicated to promoting liberty, opportunity and prosperity for all Americans.