OPPapers.com

Micro Economics

Economics 5100G

(Winter 2009)

Assignment 1

Question 1.

[pic]Sweet deal for sugar industryJacqueline Thorpe,  Financial Post, With Files From Reuters  Published: Monday, June 02, 2008
Luther Markwart will undoubtedly go down as a god in the annals of U. S. lobbying history.

The chairman of the American Sugar Alliance was a driving force behind one of the sweetest feats of protectionism ever to come out of Washington, probably the world.

Mr. Markwart managed to clinch an agreement that guarantees U. S. producers 85% of the domestic U. S. sugar market, part of a U. S. farm bill that passed last month. There are only 146,000 people involved in the entire U. S. sugar industry.

The farm bill, enacted by Congress over a presidential veto, is a US$300-billion extravaganza of protectionist insanity that increases farm spending by $20-billion at a time of record crop prices and income.

With Canada continuing to resist any changes to its own protectionist farm marketing boards and Europe steadfastly trying protect its farm interests, any meaningful reform of global agricultural policy remains a pipe dream as crunch time looms on global trade talks this summer.

In an interview, Mr. Markwart was modest about his accomplishment.

"Until you get reforms in international production and trade, you simply have to have it," he said.

Trade experts had other words for it, such as "illegal."

"I'm not a trade lawyer, but my reading of world trade law would suggest that is illegal," said Sallie James, a policy analyst with the Washington-based Cato Institute's Center for Trade Policy Studies.

No way, Mr. Markwart says.

"It doesn't violate anything under NAFTA, CAFTA any of our other bilateral trade agreements or WTO," he said, pointing out that the United States is the world's second-biggest importer of sugar after Russia.

The deal is nifty. The United States will not restrict imports. The government will simply buy up the surplus and sell it...