Reduction in the U.S. Import Fee on Sugar

ID-79-43: Published: Jul 17, 1979. Publicly Released: Jul 24, 1979.

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A request was made for an evaluation of whether the April, 1979 reduction in the U.S. import fee on sugar was justified and for information on the import fee mechanism. A Presidential Proclamation sets a fee adjustment period for each quarter. The quarterly adjusted fee is the amount which would bring the average daily spot (world) price quotations for raw sugar during the adjustment period to 15 cents a pound after adding U.S. applicable duty and attributed costs of 0.90 cents a pound for freight, insurance, stevedoring, financing, weighing, and sampling. Prior to November, 1977 this average daily spot price was set by the New York Coffee and Sugar Exchange, Inc., and it was used as a reference for merchants selling raw sugar under contracts. However, in 1977 the government filed an antitrust suit against the Exchange, alleging that its method for determining the price was illegal. Under a proposed system, the price would be determined by a group of randomly selected individuals each day. In the absence of this price, the administration used for fee-setting purposes the International Sugar Agreement world price, as was the case in April, 1979. Due to the fact that the world price had fallen substantially in the 20-day period prior to the fee-setting period, and that large amounts of sugar were expected to arrive in the United States, the fee reduction was not only justified, but mandatory. If the International Sugar Agreement price does not accurately represent world prices, the President has no obligation to raise the fee and if he decided to, an investigation challenging the accuracy of the price would have to be made. The proposed system will eliminate the objectionable practices used by the New York Coffee and Sugar Exchange.

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