U.S. domestic sugar policy maintains a guaranteed price for producers under a loan rate program, thus encouraging a certain level of production, while U.S. trade policy requires a certain level of imports, according to the ITC. Thus, high levels of U.S. production plus imports required under international obligations resulted in low sugar prices.

The ITC, an independent, nonpartisan, factfinding federal agency, recently released the report as part of an ongoing series of reports on thousands of products imported into and exported from the United States. The report addresses market, industry, and trade conditions for sugar for the period 1995-99. Following are highlights from the report.

• The United States is the fifth largest sugar producer in the world, following Brazil, the European Union, India, and China. U.S. sugar production totaled 7.6 million metric tons (mmt) in 1999, representing an almost 6 percent increase since 1995. This increase was made possible by significant increases in acres planted and increases in yields. High domestic production levels, coupled with imports of foreign sugar, fueled price declines for and forfeitures of sugar in the U.S. market.

• During the most recent five-year period, world sugar production levels have increased by 12 percent, reaching nearly 130 mmt in 1999. The top five producers captured a combined world production share of 54 percent in 1999. World sugar stocks rose by 36 percent during 1995-99, reaching almost 31 mmt in 1999. Increases in world production and stocks contributed to falling world prices.

• From 1995 to 1999, world sugar exports increased by 20 percent, from 30 mmt to 36 mmt. As a share of production volume, world exports rose from 26 percent in 1995 to 27.5 percent in 1999. The world price of raw sugar fell 51 percent from 1995 to 1999, and the world price of refined sugar fell by 49 percent in the same period.

• The United States is the world's fourth largest sugar importer. In 1999, sugar imports amounted to $640 million. The United States scheduled tariff rate quotas with the World Trade Organization (WTO) for raw and refined sugar for approximately 1.14 mmt during the Uruguay Round. In 1999, the United States imported 1.138 mmt of in-quota imports. In general, over-quota imports are non-existent, as they face a prohibitive tariff equivalent to nearly 242 percent ad valorem.

• The quantity of access for foreign sugar is in a state of uncertainty for two reasons. The U.S. sugar industry is awaiting a resolution to the issue of access for Mexico under NAFTA. The Mexican government contested the validity of the "side letter" and claims it should be able to export all of its surplus production. Also, the U.S. industry awaits a resolution to the "stuffed molasses" issue for which an estimated 113,000 metric tons of additional sugar enters the United States annually.

• Price margins between wholesale and retail markets have increased since 1995. In 1999, retail prices for refined sugar were 62 percent higher than the wholesale price of refined sugar and 104 percent higher than the wholesale price of raw cane sugar. Consumer prices for retail products containing sugar have increased since 1995, while producer prices have fallen from 1995 levels.

• Practically all of the major sugar-producing nations are afforded high levels of protection from imports, or receive some sort of government assistance.

The foregoing information is from the ITC report Industry and Trade Summary: Sugar (USITC Publication 3405, March 2001).

ITC Industry and Trade Summary reports include information on product uses, U.S. and foreign producers, and customs treatment of the products being studied; they analyze the basic factors affecting trends in consumption, production, and trade of the commodities, as well as factors bearing on competitiveness of the U.S. industry in domestic and foreign markets.

This report will be available on the ITC Internet web site at www.usitc.gov. A printed copy may be ordered by calling (202) 205-1809, or by writing the Office of the Secretary, U.S. International Trade Commission, 500 E. Street SW, Washington, DC 20436. Requests may be faxed to 202-205-2104.