Features International Sugar Journal

Duplicity, hypocrisy and trade deals

There were a variety of sticking points informing the indecisive end to the Trans Pacific Partnership (TPP) talks in early August in Maui, Hawaii. To seasoned analysts this came as no surprise as TPP represents an ambitious project that would spur growth across 40% of the global economy comprising US, Canada, Japan, Brunei, Canada, Chile, Malaysia, Mexico, Australia, New Zealand, Peru, Singapore and Vietnam. It is not that unlike earlier trade agreements which focused on physical trading, TPP, which also focuses on intellectual property, investment and services has added perceived complexity and wrangling amongst the nations concerned, embracing the classic protectionist special pleading from vested interests with political clout dictating that the talk of trade liberalization does not move beyond the spirit to the letter.

Canada’s reluctance to open its dairy sector through shielding its dairy farmers from competition from US and New Zealand (which produces 22 billion litres of milk) with measures like 241% tariffs on milk imports, Japan’s reluctance to open its rice sector and its clash with US over the rules of origin of cars, the US’ reluctance to open its pharmaceutical sector, insisting 12-year monopoly protection for drug developers against five years sought by number of countries, and Australia demanding significant access to US market for sugar were the main obstacles for the completion of the TPP talks.

One remarkable aspect of TPP disagreements is that while traditional horse-trading features in all trade bargaining, divisions within US itself, particularly with regards significant access to its sugar market from Australia was palpably visible.

Michael Scuse, the US Undersecretary of Agriculture speaking at the American Sugar Alliance conference in New Mexico in early August said that sugar cannot slow the progress of the TPP talks as, “If we don’t do this, we will be left behind” on new export markets, he said. This position is countered by the US Trade Representative Ambassador Froman’s commitment not to undermine the sugar programme, which the sugar lobby in US supported by politicians from the producing states have been effective in safeguarding. But Scuse has a point, well expressed by Daniel Pearson at the respected Cato Institute that “If the United States hopes to be successful in its legitimate pursuit of market opening in other countries, it needs to be willing to address its own previously sacrosanct programs.” But for that to happen, US sugar lobby argues, the playing field needs to be levelled, which is simply not the case in the sugar industry.

Australian Trade Minister Andrew Robb was adamant about getting greater access to the US sugar market. Not wanting a repeat of the 2005 bilateral free trade agreement with US which maintained existing restrictions on Australian sugar, he was quoted as saying “I’m not going to sign it [TPP] without something for the sugar industry.” While Australia did not aspire to get US to scrap its sugar import quota program, being offered 152,000 tonnes which included additional 67,000 tonnes, was derisory to Australians and they rejected the offer. But what is perplexing about the breast beating by the Australians at the TPP talks is that when it recently entered into free trade agreement with China (CHAFTA) there were no changes to tariffs or market access for Australian sugar exports to the Chinese market – yet China is the world’s biggest sugar importer, its 15/16 imports are forecast at 5.5 mln tonnes, rising from 4.8 mln tonnes in 14/15. There was no public declaration by a minister of not signing the agreement unless greater access for sugar in the Chinese market was forthcoming. In April 2014, Australia and Japan agreed to an Economic Partnership Agreement (EPA) which eliminated the US$ 179/tonne tariff on high polarity raw sugar, but no mention of greater access of Australian sugar to the Japanese market which imported 1.35 mln tonnes in 2014/15.

The former US Deputy Trade Representative Alan Wolf recently pointed out that, “The irony of “free trade agreements” is that they do not deliver truly free trade for everything among the parties. The agreements do make progress — within the bounds of what is considered politically feasible at the time.” Alas, there’s the rub, trade agreements, more often than not, are political projects, and with that, duplicity and hypocrisy are par for the course.