Will NAFTA liberalize sugar in 2008?

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Promising lede from Bloomberg:

Mexico and the U.S. are about to eliminate the last tariffs on goods they trade, prompting opposition by lawmakers and farmers in both countries who anticipate a flood of cheap imports.

In Mexico, farmers plan nationwide protests over what will be the final step in implementing the North American Free Trade Agreement on Jan. 1 and eliminating tariffs on American-grown beans and corn. The U.S. will drop tariffs on flip-flops, glassware and sugar, the most price-sensitive import.

“Back in 1993 when Nafta was negotiated, 15 years was a lifetime away,” said Daniel Erikson, a senior associate at the non-partisan Inter-American Dialogue in Washington. “But now this is really affecting the most sensitive products.”

Disappointing details:

Trade groups representing food makers and the Bush administration are among those who warn that unlimited sugar imports from Mexico could force the U.S. government to pay as much as $3 billion in loans over 10 years as prices fall.

Still, the imports could be checked given that Mexican prices for sugar have stayed above those in the U.S. for much of the last seven years.

“This is not just a threat to American sugar producers,” said Jack Roney, director of policy analysis with the Washington-based American Sugar Alliance. “There’s also an opportunity for us to actually export to Mexico.”

At the urging of Roney’s group, Congress adopted a measure opposed by Bush to force the U.S. to buy any surplus sugar and use it to make ethanol.

If the United States government is committed to providing expensive bailouts, then reducing tariffs and quotas isn’t much of an improvement.

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