Australian Sugar Industry Pushes Mechanisms for Increased TPP Access to US Market

Australia continues to push hard to carve out a larger chunk of sugar access into the U.S. market through the Trans-Pacific Partnership, said Australian producers and the Sweetener User Association in a recent conference call. Those on the call insisted Australian expanded access, under the right conditions, won’t undermine the complex supply and price management mechanisms in the U.S. sugar program.

Australia prefers both an expanded quota and a price-based system as U.S. sugar prices increase, and TPP partners discussed that prospect during the latest ministerial in Hawaii, said Warren Males, head of the Australian Canegrowers on the Aug. 31 call. “We talked about the possibility there of a base tonnage increase in the U.S. market that would be unconstrained by price reflecting a modest amount of sugar,” he said. “But then we also talked about stepping up access in tranches.”

Those tranches would increase when U.S. prices exceed particular price thresholds, starting with 21 cents a pound. “If Australia’s access is granted at prices above which defaults in the U.S. sugar program occur … then quite clearly that access will not harm the program and it will not diminish income in any way for U.S. farmers,” said Males.

The U.S. and other TPP partners left Maui with a range of unresolved issues, despite claims of significant progress from high-ranking government and industry officials (see 1508100011). Australian producers have for years pushed for more access into the U.S. market. The Office of the U.S. Trade Representative currently allocates Australia a nearly 90,000-ton quota annually (see 14090405). Following the Maui ministerial, press reports suggested the U.S. offered Australia an increase of more than 60,000 tons (here).

The U.S. is likely to cave to Australia and permit some expanded access, including through the price-based mechanisms, said Gary Hufbauer, trade expert at the Peterson Institute for International Economics in a Sept. 2 interview. “Australia wants a definite tonnage figure; [USTR Michael] Froman wants flexibility because of the power of the sugar industry to withstand pressure from importers,” said Hufbauer. “To satisfy Australian, the U.S. could squeeze the quotas from the Caribbean suppliers. They’d be unhappy and they’d complain about that.” The American Sugar Alliance, the leading association for the domestic U.S. sugar industry, didn’t respond for comment. The organization has previously called for no changes to Australian access (see 14100601).