Essay Sample on The Effectiveness of the US Sugar Tariff Rate Quota

The US Sugar Tariff Rate Quota is one of the most debated and misrepresented trade policies that are still applicable in the United States. Many believe that the policy was meant to create absolute control of the sugar market to the disadvantage of other nations that import to the US market. In contrast, others speculate that it was a decision to protect the US sugar business from suffering undue competition. Regardless of the view from any quota, it is agreeable that the policy supports US sugar prices to remain consistent and slightly above the world market. The regulation dates back to the Agriculture and Food Act of 1981, which sought to increase the production of food in the United States and protection of the welfare of the farmer as well as that of allied industries. It is for the utmost necessity that Americans understand how effective the US Sugar Tariff Rate Quota has been effective in upholding and protecting the US sugar producer against the currently overly competitive sugar market for them to support the policy entirely.

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The US Sugar Tariff Rate Quota works by carefully observing the production of sugar in the nation and determining how much of the same needs to be imported. It uses tariff rates, and domestic market allotments, to regulate the amount of sugar available in the US market. The basic goal of the policy is not to rid-off imported sugar from the market. Rather, the goal is to ensure that internal producers access the market of their own country before producers from other nations (McConnell, 2020). Reports indicate that the policy has been effective in restricting quantities, and sugar producers in the nation continue to enjoy a readily available market, which would not have been the case if the policy never existed.

Beghin and Elobeid (2015) indicate that there has not been an entity protected through legislation in the US as the sugar business. The authors document that the sugar program assures the sugarcane and the sugar beet producers not just by protecting them from competition but also by strengthening them by offering them the necessary supportive loans. Most of the business and industries end up being closed due to financial issues. The trade policy acknowledges the many mishaps that could affect several of their sugar producers. The provision of loans has been instrumental in protecting the business as it has offered different industries flexibility in terms of trade (Beghin & Elobeid, 2015). It has been adequate domestic price support that gives sugar producers the ability to continue manufacturing sugar even when costs rise unprecedentedly. As opposed to being a discriminatory policy, it would only be necessary if the citizens of the US viewed it as a mechanism to protect manufacturing and the benefits it brings.

Other than just creating domestic price support, the US Sugar Tariff Rate Quota secures flexible marketing allotments for sugar producers. Every year has its overall allotment quantity, which is determined by the domestic sugar prices above forfeiture levels and the estimated deliveries in the concerned financial year. Every organization that produces sugar is allotted marketing for its products within the fiscal year (McConnell, 2020). By allocating marketing for the organizations that provide sugar, the government eases the cost of production. This further has more enormous ramifications on the price of sugar in the end, as it is maintained at affordable rates for the buyers. Additionally, the marketing allotments give the sugar producers a greater ability to penetrate the market and access more numbers of customers. Among the top producers of sugarcane across the world, the US records the lowest quantity of already produced but forfeited sugar. Therefore, the citizens must understand the immense benefits of the policy to manufacturers of sugar as they seem not to be well-versed about them.

Across the world, governments have been making decisive approaches to protect the businesses they consider to be profound sources of revenue. In the US, sugar is such an instrumental source of revenue that needs protection (McConnell, 2020). Tariff-rate quotas for sugar determine the number of different elements used to process sugar that is sourced from other nations. For example, imports of raw cane and refined sugar alongside other syrups and utilities used are controlled every year (McConnell, 2020). There cannot be a better way to control the influx of products than through the national government. Thus, across the years, the ministry of agriculture has maintained a robust approach that ensures that there is not a single time when the imports of those products have been imported in excess (Beghin & Elobeid, 2017). Reports indicate that absolute quota regulations do not discriminate but give the best importers the chance to present their products to the US market. Subsequently, these efforts ensure that the citizens of the US are provided with the best quality of sugar even when the raw materials are imported.

Without the US Sugar Tariff Rate Quota, the sugar business would be messed up in such an instrumental manner. Across the world, reports of sugar being imported to other countries yet having been produced in substandard and inadequate mechanisms have been on the rise. Established years ago, the policy of the United States had been at the forefront of protecting the nation from suffering substandard products. It is necessary to observe that the organizations that are licensed to produce sugar in the nation must meet the established standards. If the production of sugar products in the fragile world market could have been allowed from without, the nation would be risking its citizens. Lifelong health implications of taking such substandard products would be heavily impactful on the US population. However, based on the policy, the production of quality sugar internally and even that which is imported follows due processes and is safe for human consumption.

Every trade policy that is developed by a government is intended to protect business and ensure the continuity of income generation. Trade policies are efforts that governments make to ensure that their industries remain competitive and that they are protected from being overrun by businesses from beyond the nation (Balistreri et al., 2018). The US Sugar Tariff Rate Quota must have been developed with these principles in mind. Besides, considering the established sugarcane producers in many other developed nations, the policy has so far protected the sugarcane business of the United States from undue competition. An important form of protection was recently witnessed when the suspension of agreements of sugar imported from Mexico. The 2015 suspension was made when it was established that sugar imports from Mexico were adversely hurting the domestic market (McConnell, 2020). Therefore, as the provision in the United States Sugar Tariff Rate Quota, the policy deserves the full support of Americans, seeing that it has secured protection for the internal sugar producers and sealed every avenue of unfair competition.

Conclusion

There has not been another nation in the world that has managed to put in place an effective protective policy for its threatened industries as the US has done for its sugar industry. A huge threat of competition faces the industry externally, but the US Sugar Tariff Rate Quota has been an effective measure to counter it. The provisions of the policy include effective measures such as domestic pricing support, flexible marketing allotments, and several others, all of which ensure that sugar producers can manufacture sustainably (McMinimy, 2016). Besides, the policies have ensured that the cost of production is cheap, which makes the products to be as well affordable. Therefore, it is necessary that Americans are informed about the essence of the policy as in protecting the sugar business for them to direct more support to it regardless of the speculations of discrimination that are directed towards it.

References

Balistreri, E. J., Bohringer, C., & Rutherford, T. (2018). Quantifying disruptive trade policies. Retrieved May 4, 2020, from https://aae.wisc.edu/wp-content/uploads/2018/12/brfpaper.pdf

Beghin, J. C., & Elobeid, A. (2015). The impact of the US sugar program redux. Applied Economic Perspectives and Policy, 37(1), 1-33. https://doi.org/10.1093/aepp/ppu028

Beghin, J. C., & Elobeid, A. (2017). Analysis of the US Sugar Program. AEI Paper & Studies, COVC. Retrieved May 4, 2020, from https://www.aei.org/research-products/report/analysis-of-the-us-sugar-program/

McConnell, M. (2020). Sugar & Sweeteners Policy. United States Department of Agriculture Economic Research Service. Retrieved May 4, 2020, from https://www.ers.usda.gov/topics/crops/sugar-sweeteners/policy.aspx

McMinimy, M. A. (2016, April). US Sugar Program Fundamentals. Library of Congress, Congressional Research Service. Retrieved May 4, 2020, from https://fas.org/sgp/crs/misc/R43998.pdf