Excerpt: … As the season of candy canes and chocolate Santas approaches, sugar is selling for 24 cents per pound on the U.S. commodities market, about 9 cents above the world price. This differential is due not to market forces but rather to government intervention. Specifically, U.S. sugar producers persuaded the Commerce Department to threaten Mexican producers with tariffs for allegedly subsidizing sugar exports to the United States. In late October, U.S.-Mexican negotiations produced a preliminary deal under which the United States would refrain from imposing tariffs if Mexico’s industry accepted price and quantity controls on its exports; the expectation that U.S. supplies will tighten accordingly has driven up prices.
On its merits, the U.S. producers’ case against Mexico was, at best, hypocritical. It’s true that the Mexican government owns about a fifth of the country’s sugar industry, which implies a subsidy, though precisely how much is hard to quantify. Yet U.S. producers, though nominally private, have benefited from federal subsidies and protections since the New Deal, including per-country quotas on imports.
Read the full editorial here.