America’s New Trade Agenda: Holding Cheaters Accountable

Opening new markets abroad has been a mainstay of U.S. trade policy since WWII. It’s a noble endeavor, but it cannot succeed in isolation in today’s cut-throat international marketplace.

Once America creates a new opportunity with a new trade deal, it must strictly enforce established trade rules to ensure countries don’t erect new roadblocks or game the system to America’s detriment.

Sadly, the United States has fallen short on the second half of this equation, which is why President-elect Donald Trump’s pledge to modernize our trade policy by rooting out foreign cheating and holding our competitors accountable has been so well received. And our soon-to-be president has not disappointed with his initial appointments in this arena.

Wilbur Ross, Trump’s pick as Secretary of Commerce, is already signaling a refreshing trade mantra, telling one media outlet, “Free trade doesn’t mean dumb trade.” Meanwhile, Robert Lighthizer – a man with a long history of strictly enforcing trade laws and helping level the playing field – was tapped as U.S. Trade Representative.

Both men will have their work cut out for them. The use of hard-to-track subsidies, no-interest loans, debt forgiveness, non-tariff barriers and market-distorting tactics like currency manipulation have been on the rise around the globe.

Nowhere is it as obvious as in the sugar sector, which employs 12,000 Floridians and pumps more than $3 billion into our state’s economy each year.

Sugar is widely considered the world’s most distorted commodity market. Global sugar prices have fluctuated more than 200 percent since 2008 alone and often fall well below the cost of producing sugar. Why? Because of the actions of a few government-dependent producers.

Brazil, with the aid of more than $2.5 billion a year in subsidies, has seized control of nearly half of all exports and has used this stranglehold to exert OPEC-like control over sugar pricing. Other major players like Thailand and India have been forced to create billions in other subsidy schemes – some of which break global trade rules – to keep pace.

And now, places like China are using government controls to restrict imports, keep inefficient growers afloat and build stockpiles to further distort free markets.

America only has a sugar policy because of these foreign transgressions, but unlike others, our policy is structured to run at no cost because it is based on tariffs and loans repaid with interest rather than subsidy checks. This no-cost safety net is the only thing keeping efficient U.S. growers from falling victim to foreign treasuries, but the policy isn’t perfect.

In 2013, for example, it cost more than $250 million because Mexico deliberately broke U.S. trade law and dumped subsidized Mexican sugar onto the U.S. market. This was in addition to foreign sugar already entering the U.S. market from Brazil, Thailand and dozens of other subsidizers.