The Wall Street Journal’s Mary Anastasia O’Grady writes today to explain big business interests versus consumer interests, the underlying factors behind the DR-CAFTA impasse over the corn syrup tax. Given the status quo, O’Grady explains that individual and industrial consumers in the US and the DR pay a very high price due to the protected markets of both countries.
In a commentary titled “Sugar Daddy Decadence,” she writes that, at the heart of the DR’s decision to renege on what was signed by including the contentious surcharge on high-fructose corn syrup (HFCS) imports, is “a battle between the concentrated power of US sugar barons and the broader, diffused interests of consumers.” She comments the issues at stake go beyond the CAFTA, while mentioning that getting the FTA through the US Congress without the DR will be “enormously difficult.”
The writer continues: “Indeed, the outcome could foreshadow whether narrow US agriculture interests like Big Sugar can ever be brought to heel, or whether they will continue to undermine US geopolitical and economic interests in free trade.”
The FTA is of importance to US trade, as she points out that trade analysis have indicated that US exports could almost double in several categories.
O’Grady explains that sugar exports represent a minuscule, almost symbolic opening for the sugar market. The real problem is that “for coddled US producers whose fortunes depend on a protected market, it is apparently cause for alarm.” She explains, “Sources close to the matter say that DR sugar growers, worried that CAFTA’s opening of the DR market to HFCS would damage them, lobbied the DR congress for the tax.” She points out that among the notable US sugar producers are Florida sugar barons Alfonso and Pepe Fanjul, who also happen to be prominent DR sugar growers and owners of that country’s largest sugar mill.
O’Grady emphasizes that “for an interest like the Fanjul family, the HFCS tax would be a win-win. If the tax survives, its DR sugar interests are protected from HFCS competition. If the tax takes the DR out of CAFTA, and that translates into a lack of support in the US Congress for ratifying the deal, US markets will remain protected from imports.”
Mentioning the extraordinary price supports and protectionism that has bolstered a sugar lobby that is known for being a generous political backer, O’Grady says:
“The efforts in the Dominican Republic are just a small part of a nationwide campaign by US sugar producers to defeat CAFTA simply because they do not want to change their antiquated program that rewards them with a price for sugar that is three times the world market price.”
O’Grady writes that the sugar lobby’s ploy to strangle a promising new market for millions of Latins and Americans ought to scandalize Washington, which pays lip service to the downtrodden on a daily basis.
Moreover, the WSJ reporter alerts that US Democratic Congressman Charles Rangel “seems to be taking the side of the rich sugar barons, arguing that Mr. Zoellick is trying to strong-arm the DR. Considering the costs that the poor pay when markets are protected, Mr. Rangel seems to have left his populism somewhere in the cloakroom,” she concludes.