ADDRESS U. S. SENATOR ALLEN J. ELLENDER TO THE INTERNATIONAL CONVENTION OF SUGAR CANE TECHNOLOGISTS NEW ORLEANS, LOUISIANA NOVEMBER 1, 1971

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1 MAJOR ADDRESSES

2 ADDRESS U. S. SENATOR ALLEN J. ELLENDER TO THE INTERNATIONAL CONVENTION OF SUGAR CANE TECHNOLOGISTS NEW ORLEANS, LOUISIANA NOVEMBER 1, 1971 Ladies and Gentlemen: It is a great pleasure and an honor for me to address this Fourteenth International Congress of the Sugar Cane Technologists. I understand this is only the second time the convention has been held in the United States. As a Louisianian, and as one who has been very close to the Louisiana Sugar Industry, I am particularly proud that your group of 53 countries selected New Orleans as the site for its convention. This great city is one of the commercial and cultural crossroads of the Western Hemisphere and, indeed, of the entire world. Therefore, I assume that many of you have been here before. To those of you who have, I say "welcome back." To those of you who are here for the first time, I extend the sincere welcome of the city, the State, and of the Louisiana Congressional Delegation. I trust your stay will be pleasant and constructive, not only professionally, but in terms of the relaxation, recreation, and fellowship I am sure are being provided by your gracious hosts of the American Sugar Industry. Of course, I am particularly proud of the efforts of our own Louisiana hosts headed by Mr. I?. A. Graugnard, Dr. Denver Loupe, and others. As you know, my State produces a considerable amount of sugar. And my Committee assignments in the United States Senate for the last 35 years have had much to do with agricultural legislation. Therefore, I am glad to have the opportunity of sharing with you a few thoughts both on the international implications of the Sugar Act and on international trade of agricultural products gen- Many of you know that sugar was once a luxury item available to the few that could afford it. But now sugar is among the most widely used foods. For example, in the early 1820's, the per capita consumption of sugar in the United States was nine pounds. It has now risen to more than 100 pounds. Sugar production in the United States involves about 28,000 farms producing both sugarcane and sugar beets. In addition to the farms, about 150,000 farm workers are required, mostly on a seasonal basis. Sugar beets are produced in 24 states and sugarcane in three states, plus the Commonwealth of Puerto The United States Sugar Act was designed in the early 1930's. The United States Congress has just recently extended the Sugar Act for a period of three years. The Act is intended to do three things: 1. Make it possible to produce a substantial part of our sugar require-.\ I

3 44 I.S.S.C.T. CONGRESS 1971 ments within the United States by protecting those engaged in producing sugar. This is a matter of national security. 2. Assure U. S. consumers of a plentiful and stable supply of sugar at reasonable prices. And 3. Permit friendly foreign countries to participate equitably in supplying our market. This is intended to promote exports of American products and to assure a stable and adequate supply of sugar. Approximately 12 percent of world sugar production cannot be sold in the country where it is produced or in preferential foreign markets. About 75 percent of total production is consumed in the countries where it is produced. Usually these growers and processors are paid a price which is much higher than the world market price. Major countries who are not self-sufficient in sugar ~roduction generally require the payment of minimum prices to growers. They also impose some form of restrictions on imported sugar for the protection of their domestic producers. The United States Sugar Act has been notably successful in attaining all three of its basic major objectives. Currently, about 40 percent of our total consumption of sugar is procluced by growers on the mainland. This figure increases to about 55 percent when Hawaii and Puerto Rico are included. The Sugar Act has given consumers the security of supplies at reasonable costs-at no cost to our taxpayers. The Act has been successful, too, in promoting foreign commerce by allowing us to share our sugar market among friendly nations. Certainly we are criticized at times for the distribution of that portion of our quota that goes to foreign countries. But the United States Congress has five very good guidelines which it uses in allocating quotas to foreign countries. 1. The quotas are given to countries with which we have friendly government-to-government relations, including non-discrimination against United States citizens. 2. The quotas are distributed to countries which have a dependable source of sugar supply. This is judged by that nation's history in supplying the United States market-plus its potential for supplying additional sugar during periods of critical shortage. 3. Another criterion is a reciprocal trade relationship. This is judged by the foreign nation's record of purchasing United States products and services -especially commercial purchases of agricultural commodities. It is also judged by the other nation's treatment of imports from the United States. 4. A fourth criterion is a foreign country's need for a premium-priced market in the United States. This is judged by its dependence on sugar as a source of foreign exchange... its present need for economic development... and other factors. 5. A fifth criterion is the location of the other nation. Consideration is given to how this location will affect the security of American sugar supplies during emergencies. Special consideration is given to countries in the Western Hemisphere and to the Republic of the Philippines because of political or treaty ties. Yes, the United States Sugar Act has served the people of the United States

4 MAJOR ADDRESSES 45 satisfactorily for years. But it has also benefited producers in other parts of the world, even those countries not sharing in our quota. Now, for a few moments, let me deal with some other agricultural comrnodities and world trade in these commodities. We in the United States Congress-along with the Administration-have been seriously concerned about the rise of trade protectionism in many parts of the world. We are concerned that the world seems to be moving away from an open system where trading is multi-lateral and nations can *expect equal treatment one with the other. The world trading system has not been perfect by any means. But for a third of a century, the trend was toward liberalism in world Today-we are seeing a reversal of this. We see a world where regionai associations are blossoming. We see trade policies that favor the countries associated in these groups. We see discrimination against countries that are not a part of these groupings. And we see policies within those associations that foster over-production in member countries-often at high cost. Such a system denies markets to outside countries that produce efficiently. It also creates high-cost surpluses. And these surpluses are often dumped in the world market with tlle aid of high export subsidies. All of this is destructive to world trade. These trends are now in sharp focus because of developments in the European Community, and the likely enlargement of the Community to include other major markets in Europe. But there are also protectionist tendencies in many other countries-in Asia and Latin America, for example. In all producing countries, there is a temptation for some groups to seek protection for their industries. Once these forces are set loose, they seem to be contagious. Protectionism in one country leads to protectionism in another. What about the United States? We are sometimes accused of being protectionist. The charge is made that the United States maintains strict conti-01 over all competitive agricultural imports. What is the truth of this? The fact is we do have import controls in the United States, but our agricultural import system is a relatively liberal one. This is reflected in the fact that, although we are a major exporter, we are also a major importer of agricultural products. Imports in the fiscal year that ended June 30th amounted to $5.8 billion. This compares with exports of $7.8 billion. And about three-fifths of these imports were directly competitive with United States farm production. As for import controls, there are only six commodities where the United States applies controls. These are (1) beef, veal, and mutton, (2) dairy products, (3) cotton, (4) wheat and wheat flour, (5) peanuts, and (6) sugar. May I comment briefly. In the case of beef, the United States takes nearly 40 percent of world imports-many of these from countries that are represented in this meeting. Until a few years ago, the United States had no restriction on imports of beef, veal, and mutton. It also had a very low, fixed duty. For the past few years, we have had a voluntary restraint program. The major supplying countries have agreed to put limits on what they send us in chilled and frozen form. We have no price support system. Under the voluntary program, these imports are at a record high level, even with restraints in effect. The imports are even higher than in 1963, a year of rising imports that caused our Congress to enact the meat,

5 I 46 I.S.S.C.T. CONGRESS 1971 I The exporting countries wish that they had the same opportunities to market their beef in the other major markets of the world as they have in the United States. They are selling more to us at higher prices year by year-a contrast to the other two import markets. In the United Kingdom and the European Community, beef import opportunities have tended to decrease year by year. In dairy products, the United States has tight quantitative controls on most imports. These protect a price support system in our country. They are part of a pattern of controlled imports all over the world. In the late 1960Js, there developed an enormous world surplus of dairy products. Some producing countries were seeking outlets at almost any price. At that time, tight import controls were instituted in all major world markets. The world dairy market was in a slate of total disruption. There are literally no open dairy markets left in the world. Although we are protecting our producers, the same thing can be said about the other major importing countries of the world. Now let us look at cotton, wheat, flour, and peanuts. These imports are limitecl into the Unitecl States to protect our price support program. But I would hasten to add that these import controls meet the test of the GATT since we are restricting our own production of each of these commodities. There could be fair criticism of us internationally-if we were not making major efforts to harness our own surplus production. This leaveb}only sugar as a commodity for which the United States maintains an import control program. As 1 said earlier, this program was recently extended through The 1971 Act retains many provisions of the old Act passed in The existing relationship between United States and foreign quotas will remain approximately the same as it is now. I think it is iair to say that, for a country with a large unused capacity for growing sugar, the United States is remarkably liberal in its import program. This year, the United States is importing sugar valued at about $750 million. If there is a comparable example of trade benevolence in the world, I would like to know what it is. As in the case of beef, the sugar exporting countries would love to sell their sugar in the European Community as they have to the United States. The European Community has not only excluded imports of sugar, but has also dumped its surplus on the world market. In the process of developing and passing the Sugar Act extension, our Congress listened to a great many views and petitions relating to the sugar quotas for individual countries. In general, the Congress responded by approving quotas that are equal or larger than the quotas already in effect. And, don't forget that the United States price is far higher than the world price. As I reflect now on the Unitecl States sugar quotas, it occurs to me that many of our supplying countries could be more liberal in accepting U. S. farm products. Consider a few examples: Brazil has a large U. S. sugar quota. It has increased for the next three years. Yet the United States has been hurt badly as a supplier of wheat to Brazil. That country has restricted our wheat trade through state trading and bilateral agreements with other suppliers, mainly Argentina and Canada. In addition,

6 -- - MAJOR ADDRESSES 47 high duties and other charges limit U. S. sales of apples and pears. The American fruit has to compete with duty-free fruit from Argentina. Australia has a system of domestic marketing quotas and high domestic prices that have artificially expanded tobacco production in that country, This has substantially reduced U. S. sales of tobacco in Australia in recent Mexico is one of the largest suppliers of sugar to the United States. Yet Mexico maintains tight licensing requirements and very high tariff levels. These severely restrict imports of many U. S. agricultural products. The Philippines is the single largest beneficiary from the U. S. sugar import program. Yet the Philippines has a number of restrictions that reduce U, S. farm imports. These include state trading, burdensome documentation requirements, and restrictions on the issuing of letters of credit. That nation also requires special licenses for the Bank of the Philippines. The Dominican Republic will benefit from a substantial increase in its U, S. sugar quota. Yet tariffs and other restrictions levied by that country work against imports of U. S. farm products. There are temporary or partial embargoes on products such as rice, beans, vegetable oils, and corn. Prohibited items include pork products and fresh and canned vegetables. These are just a few examples-not necessarily the worst. These countries benefit from the U. S. sugar program, yet they discriminate against outside suppliers of other farm products, including the Unitecl States. There are a legion of other countries that do the same thing. This is one measure of the distance we have to go in achieving a really liberal trading system among our friends. Yet this is a worthwhile goal, and we should strive toward it. The Congress extended the Sugar Act only three years because it expects extensive world sugar economy changes by For example, the International Sugar Agreement expires at the end of Negotiations toward extension of that Agreement will probably occur that year. The entry of the United Kingdom into the European Community could affect Commonwealth countries that produce sugar. change in the method of determining the price objective. Under the new law, the President will have cliscretionary authority to suspend part of a country's quota but not all of it as the present law provides. The President, at his discretion, is authorizecl to levy a tax up to 920 a ton on sugar from any country expropriating U. S. property. The law still gives the President discretionary power to clistribute' deficits if such a clistribution appears to be in the U. S. national interest. No specific limitations or ceilings are placed on foreign country quota allocations. There will be a quota on conlections hegirming in 197:!. This quota will be related to the history of imports and sales in the United States. It is also provided that imports of beet molasses may be limited in quantity if the Secretary u, < 'Yl

7 1 48 I.S.S.C.T. CONGRESS 1971 of AgricuIure determines that they will substantially interfere with the objectives of the Sugar Act. All in all, the United States Sugar Act, as extended through 1974, is a fair and realistic accommodation to a worlcl trading system that is changing rapidly. It will enable the Congress to reconsider, sliglltly more than two years from now, the future of the U. S. sugar program.