Student Handout

If Trade Barriers On Sugar Are Removed

Fill in the chart.  Remember that there are 2 markets – the U.S. market for sugar and the world market.  First decide what will happen to the price of sugar in each market if the trade barriers are reduced or removed.  (Use arrows, , to show whether the price will go up or down).  Then decide whether each of the listed interest groups will support or oppose the removal of U.S. tariffs and quotas.

Now you should be able to answer the original questions from the reading:

A. Is U.S. sugar policy a sweet deal?  (For whom?)

B. Considering the numbers of people who benefit and the numbers who bear the cost of U.S. sugar policy, why have the quotas and tariffs remained in effect so long?  Offer evidence from the article to back up your argument.

• Hint: Sugar policy is enacted by Congress.  Which groups have the greatest incentive to lobby Congress and to vote for Congressmen who support sugar quotas?

Current events and the sugar market:

The reading on the history of sugar policy mentions two interesting recent developments in the sugar market:

• The rising demand for and availability of sugar substitutes (mostly corn-based), and

• The North American Free Trade Agreement (NAFTA) that allows Mexico to avoid the U.S. sugar trade barriers.

That adds two new interest groups to the chart.  Do they support or oppose removal of U.S. sugar quotas?