As the ink dries on the Trans-Pacific-Partnership (TPP) deal, some U.S. winners and losers are beginning to emerge. U.S. workers in sugar-utilizing industries: sorry, you lose. U.S. sugar producers: you win. The reason: while the United States made concessions in other areas, America’s protectionist system for sugar suffered only minor tweaks. Plus, Marco Rubio likely is very pleased with the sugar deal – will it effect his election chances?
U.S. sugar producers have been vigorously protected from imports for decades. However, beginning with the U.S.-Canada Free-Trade Agreement (negotiated during the Reagan Administration), restrictions on imports of sugar-containing products have loosened. Likewise under NAFTA, U.S. sugar was protected, but not sugar-containing products.
You can prove this for yourself during your next supermarket trip. Look at a box of cookies or a bag of candy: you’re likely to see Canada or Mexico listed as the country of origin, even if the brand (e.g., Hershey, Brach’s) is an American one.
Thus, while America protects its basic sugar inputs, the value-added (and better paying) jobs in the sugar industry have migrated to Canada and Mexico.
Under the TPP this situation will continue.
U.S. negotiators can boast how they’ve opened the U.S. market to Australian sugar, as the TPP grants Australia TPP will allow U.S. imports of Australian sugar to increase by 65,000 metric tons per year. Further, whenever the quotas are temporarily lifted due to U.S. production shortfalls, Australia is guaranteed to have 23 percent of the expanded ‘shortfall quota.’ But there’s less here than meets the eye, as U.S. consumption of sugar in the 2013/2014 fiscal year amounted to 11 million metric tons.
The Australian position seems to be that a drop in the bucket is better than nothing. However, they remain unhappy that U.S. sugar production remains protected even after signing a U.S.-Australia Free-Trade Agreement in 2004, and now the TPP.
What’s the political angle behind the TPP sugar deal and Senator Rubio? Rubio is from Florida, where a large part of the U.S. sugar cane industry is located. His parents came to the United States from Cuba. And most of the U.S. sugar cane industry is controlled by one family, the Fanjuls – the senior Fanjuls having emigrated from Cuba to the United States.
So it’s no surprise the Republican side of the Fanjul family is backing Marco Rubio, not fellow Floridian Jeb Bush. It’s been reported that one of the first people Rubio greeted after making his presidential campaign announcement was Pepe Fanjul, Sr. (Pepe’s brother is a Democrat, and has probably already contributed to Hillary’s campaign – but I doubt Bernie Sanders will be getting a check too.)
While the Fanjul family has reaped the benefits of a protected sugar industry, other Americans have paid a price in lost jobs.
According to a 2006 U.S. Department of Commerce report, for each U.S. sugar production job saved by protection, we lost three candy-making jobs to other countries. From what I’ve seen in my Delaware supermarket in 2015, we now could add U.S. job losses in the cookie sector.
With processed food producers coming under increasing pressure to hold down prices by retailers such as COSTCO and Walmart, we can expect even more job losses in sectors that rely on sugar as an input.
In short, what we have is a special interest group with lots of political muscle to protect its industry – to the detriment of 120,000 U.S. jobs lost over the past fifteen years. And that’s OK with Marco Rubio?