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Daniel Griswold discusses the WTO meetings on CNBC's Street Signs.
December 9, 2005.
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CNBC Host: "Do you expect anything to happen at this Hong Kong meeting? The U.S. has already lowered expectations pretty dramatically in recent weeks."
Daniel Griswold: "My expectations for Hong Kong are pretty low but I have higher expectations for the round as a whole. This is a tremendous opportunity for a win-win deal on a global scale. Hundreds of millions of dollars ... billions of dollars can be added to global income with an ambitious agreement. Look, 75% of global spending power is outside of the United States. There is a tremendous opportunity here to open up markets for US exporters of services, farm goods and manufacturing goods. And speaking of farming it's a great opportunity for us to reform these expensive exploitative farm programs right here at home."
"I think an ambitious agreement can deliver benefits to both rich countries and poor. The biggest benefit of trade liberalization is to the countries that liberalize most. That's where we are seeing the fastest growth in developing countries and the greatest progress against poverty are those that have liberalized the most. And there are tremendous opportunities here at home in the United States reforming our ..."
Interrupted
Daniel Griswold: "I don't think the record shows that. In fact China is now the world's number three importer. There has been a tremendous growth. Our exports to China have doubled since 2000 and oil has not been a part of that. China has a veracious appetite for imports and in fact importing and exporting are both part of the story. Their tariffs have come down significantly both before and after they joined the WTO. So China is an example of trade liberalization working but there are plenty of other countries, and one reason why we are so rich and dynamic in the United States is our increasing engagement in the global economy."
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Daniel Griswold speaks out against sugar subsidies on Canada's ROB TV's Squeeze Play.
February 14, 2005.
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Canada's Rob TV Host: "Is there a genuine price for sugar in America or is an inflated price?"
Daniel Griswold: "Definitely an inflated price. The government guarantees the sugar industry about $.20 per pound. Well if you look in the newspaper, the global spot price is about $.7 - $.8 a pound. So the government through quotas, restricting imports ... through guaranteed loans, propping up the domestic price ... has given the sugar industry a real sweet deal. Domestic price, three times the global price, but as you said it's a pretty sour deal for consumers and when you try to maintain a price that high you are going to have to fend off lots of competitors like the Splenda alternative."
Canada's Rob TV Host: "But you know, agricultural subsidies are across a wide range of different vegetables, and beet sugar is one of the areas government plays in. And yet it doesn't control the pricing of other vegetables and vegetable substitutes ... so there must be something unique about sugar or this is a conspiracy theory. Because just because you give the farmer $.20 for beet sugar doesn't mean that sugar stays high in price."
Daniel Griswold: "Well that's a good point, and most US crops ... over half of vegetables and fruits operate without government subsidies. So, yes, you can survive without subsidies. But, yes, the sugar industry does have a sweet deal. Part of it is in the geographic concentration. The sugar industry is in Florida ... we all know how important that state is economically. Louisiana, they grow the cane sugar. Across the north west, a lot of states that border Canada ... North Dakota, South Dakota, Minnesota ... that is where you have the beet sugar. So you have about 10,000 farmers. And then what really gives them their muscle I think is the processors that buy the sugar and they also benefit. So it's a very powerful lobby, and the costs are spread out. American households are ripped off about $2 billion a year. But its spread out over 110 million US households. So that's where the sugar lobby gets its political muscle in Washington."
Canada's Rob TV Host: "Can you expand on how the subsidy works. Does the US government actually buy sugar?"
Daniel Griswold: "Well, they guarantee cane growers $.18 a pound and sugar beet growers $.22 a pound. And they maintain a high domestic price mostly through quotas that restrict imports. So imports only account for about 12% of the US market. On most years that's enough to keep the domestic price about that guaranteed price. If it falls below, the government buys up the excess. And there are some years where taxpayers are spending $200-$300 million to buy up excess sugar and stick it in a warehouse somewhere. So not only are Americans being socked as consumers on Valentines Day, on Christmas, on other Holiday's and every other day of the year ... but they are also being socked as taxpayers as well."
Canada's Rob TV Host: "Now, last I remember this was a big issue in the WTO subsidy debate that's going on because sugar was one of the commodities that has been focused on internationally. Now, this is probably not a stable situation ... or .. can this lobby keep this thing intact for the next decade?"
Daniel Griswold: "They are going to try! They are going to do everything they can to block any change to the program. You're right, this is key to comprehensive WTO agreement. So U.S. exporters are paying a price for this because it's holding up global trade deals. Also Brazil has brought a case against the European Union and the WTO and their sugar program which also keeps prices artificially high and that's working its way through the process. So really the sugar problem in the United States is a big stumbling block to achieving more global trade globally for services and industrial goods as well. So the sugar lobby is standing afford progress on a broad range of funds."
Canada's Rob TV Host: "Will we see any reduction in Big Sugar's influence?"
Daniel Griswold: "I think there definitely should be. You know if you want to get serious about spending, we're spending something like $20 billion a year in the United States on farm subsidies, and sugar subsidies are part of that. So, you've got to take a shot at it. Sugar subsidies have political support on the Hill, every time it comes up for a vote, even to cut the loan rate by $.1 or $.2 cents, only about a third of the members of Congress vote for it. So it's going to require serious Presidential leadership for President Bush to get this done. But we really have to do something about it. This program is really a scandal for the United States domestically and in the rest of the world.
Canada's Rob TV Host: (referring to Splenda) "This stuff takes like crap. I don't think they have any chance at all of being worried about it. All of the other sweeteners are the same thing. People can tell the difference. Have you tried it?"
Daniel Griswold: "I think my wife likes Splenda so I'm not one to argue with her. But when you maintain a price as artificially high as the sugar industry does through this program, you're going to have competitors on broad fronts. High fructose corn syrup is another one. Most soft-drinks don't have sugar in them, they have high fructose corn syrup in them. And as a result, sugar consumption in the United States has actually been on a downward trend. Americans consumed more sugar 20-30 years ago than we do today because in a way the sugar industry is pricing itself out of the market. So this program is not only bad for taxpayers, consumers, and poor farmers around the world ... not to mention the US environment such as places like the Everglades being harmed ... it's not even good for the sugar industry in the long run."
Canada's Rob TV Host: "So what is the long run outcome?"
Daniel Griswold: "It's hard to bet against the sugar industry. They've won a number of battles. You know we didn't have a sugar program for a few years in the 70's and the industry managed to get along, so I think they can survive and even thrive in a more competitive environment. But the stakes are high for them. They extract something like a $1 billion a year from the US economy for their benefit. They're going to fight that tooth and nail. Take the Central American Free Trade Agreement. It only allows an extra 100,000 or so metric tones per year. That comes to one tenth of an ounce or one packet of sugar, per family, per day through the Central American Free Trade Agreement. And they're fighting it tooth and nail. And the outcome of CAFTA is in doubt."
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