High-level talks to wrap up a 12-nation Pacific trade pact here have put one set of locals on edge: Maui’s sugar-cane operation, which is concerned that U.S. concessions to growers in other countries could hurt its business model.
The proposed Trans-Pacific Partnership appears all but certain to allow more sugar imports into the U.S. from some countries, putting pressure on farmers and potentially disrupting a carefully balanced government program that protects the industry, American growers say.
“Any sugar that’s brought in is going to directly offset what we’re doing here,” said Rick Volner, the general manager of Hawaiian Commercial & Sugar Co., on the island of Maui—the last remaining sugar mill in Hawaii.
Trade ministers from 12 countries around the Pacific arrived on Maui this week to wrap up an agreement that would ease barriers at borders and set rules of the road affecting two-fifths of the world’s economy.
The deal is set to spur economic growth and enhance competitive businesses in the bloc, but some industries could suffer from increased competition, with sugar high on the list.
Led by Australia, other nations involved in the talks are jumping at the opportunity to help their farmers send more sugar to the U.S.
“I’m not going to sign it without something for the sugar industry,” Australian Trade Minister Andrew Robb told Australian radio on Tuesday. “It’s now just a matter of what I can secure.”
Australia isn’t alone in seeking changes. American confectioners and other sweetener consumers have been fighting in Washington to end the trade restrictions of the U.S. sugar program to secure lower domestic prices, and they contend the long-standing political muscle of cane and beet growers is weakening.
Sugar farmers and processors say they still have sufficient support in Congress to continue the program, which they argue is necessary because of government subsidies to competitors around the world.
The U.S. sugar program-a complex collection of loans, price supports and import restrictions-is designed to bolster American sugar growing and processing businesses, despite the availability of cheaper sugar on the world market. The U.S. imports about 30% of it sugar needs, or more than 3 million tons a year.
Florida and Louisiana lead U.S. cane production, while Minnesota and Idaho produce the most sugar beet. The industry supports 142,000 direct and indirect jobs and provides $20 billion in economic activity annually, according to the American Sugar Alliance.
As with several thorny issues in the Pacific talks, U.S. trade representative Mike Froman is seeking to strike a delicate balance on sugar, opening American markets to more foreign competition without disrupting a politically entrenched program protecting the industry, according to people following the talks.
One option is to give Australia an extra sugar quota in addition to the amount it is allowed to ship to the U.S. under a World Trade Organization agreement. Giving Australian agriculture a bigger foothold in the U.S. market could help the country accept rules the U.S. is pushing on investor-state arbitration and intellectual property, according to people familiar with the talks.
But too much extra sugar from Australia could weigh on shipments allotted to Mexico, another TPP country. It also could depress U.S. prices or lead cane growers in the South and beet growers in the Midwest to complain to lawmakers, eroding crucial support for President Barack Obama’s trade policy in the House of Representatives.
“We’re already taking a lot of sugar, and we don’t need much more, given the type of trade agreements that we’ve made,” said Jack Roney, director of economics and policy analysis at the American Sugar Alliance, which represents the U.S. industry from farmers to processors and refiners.
Earlier this month, Mr. Froman said he wouldn’t undermine the U.S. sugar program.
In Hawaii, sugar has long played a key role in economic development, along with whaling. With the rise of tourism, sugar’s importance faded, and the railroad that once carried cane along Maui’s west coast is now little more than a curiosity for visitors, including the trade ministers gathered at a beach resort nearby.
Hawaii produced more than a million tons of sugar a year in the 1960s, but output has since fallen to a fifth of those levels, said Ryan Weston, Washington representative for Texas and Hawaii sugar cane growers. Sugar supports more than a thousand jobs on Maui, and burning sugar cane adds a significant source of renewable electricity to the island’s grid, he said.
High labor costs for 750 year-round employees are the main reason the operation has to work hard to compete globally, explained Mr. Volner. “This is an expensive place to live,” he said.
Not everyone on the island is sweet on sugar. “They release all kinds of pollutants,” said Marti Townsend, Hawaii director of the Sierra Club, adding cane growers use water once available to traditional taro farmers.
