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Sugar Program: Changing the Method for Setting Import Quotas Could Reduce Cost to Users

RCED-99-209 Published: Jul 26, 1999. Publicly Released: Jul 30, 1999.
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Pursuant to a congressional request, GAO provided information on the Department of Agriculture's (USDA) Sugar Program, focusing on: (1) USDA's procedures for setting the tariff-rate quota for imported raw sugar; and (2) the U.S. Trade Representative's (USTR) procedures for allocating the quota among sugar-producing countries.


Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Agriculture To make the sugar program less costly to domestic sugar users, the Secretary of Agriculture should gradually increase the size of the tariff-rate quota so that the resulting domestic sugar prices are more consistent with the estimated minimum prices for avoiding sugar loan forfeitures.
Closed – Not Implemented
USDA disagreed with the recommendation and the supporting analysis. USDA stated that sugar prices are already consistent with the estimated minimum prices needed to avoid loan forfeitures and, therefore, there is no need to change the tariff-rate quota. USDA has kept the size of the tariff-rate quota at the minimum needed to comply with its GATT commitment.
Office of the U.S. Trade Representative To better ensure that the tariff-rate quota is completely filled and better reflects world market conditions for raw sugar, the USTR should consider changing the process for allocating the tariff-rate quota in a way that is consistent with U.S. trade agreements while ensuring that any administrative changes are not unduly burdensome. Changes could include such actions as providing a means of reallocating unfilled quota or selecting an entirely new basis for allocating quota shares.
Closed – Not Implemented
USTR expressed some reservations about whether the recommendation would be practical or beneficial to the various stakeholders. It also stated that while the recommendation is theoretically possible, it would require consideration as to whether implementation could be done in a manner that is consistent with commercial and other requirements without introducing unreasonable levels of commercial uncertainty. It also noted that many factors have contributed to the decline in sugar refiners since 1981. The statement of action has not been received. As of July 2003, USTR had not changed its process for allocating the tariff-rate quota.

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