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. Free Trade
Why Bush Excluded Sugar

Bush to exclude sugar from free trade pact
By Edward Alden in Washington
2004-02-11
President George W. Bush made the final decision to exclude sugar from the free trade agreement completed with Australia last weekend, according to administration and agricultural industry officials.

The White House decision, which shores up the president's electoral prospects in key states and avoids a bruising election-year trade fight in Congress, has raised new questions about the administration's willingness to stand up to domestic lobbies that oppose freer trade.

Mr Bush has already faced international criticism over his 2002 decision to protect another politically powerful industry, steel, that is influential in several electorally important states.

The deal with Australia was the first bilateral trade pact in which the US insisted that a product be excluded entirely. The agreement, finalised by Mr Bush and John Howard, Australian prime minister, in a Saturday night phone call, has drawn sharp criticism from members of Congress with a long history of supporting freer trade.

Charles Grassley, Republican chairman of the Senate finance committee, called the sugar exclusion "a dangerous precedent". Cal Dooley, one of a handful of House Democrats who has staunchly supported the administration on trade, said: "It is a disgrace that this industry, representing less than one-half per cent of all US farms, is exempted from this agreement."

The sugar industry has political influence in the US far beyond its small size. It is heavily concentrated in Florida, the most closely fought state in the 2000 election, and can rally farmers in both southern and midwestern states.

The industry is also a large donor to Mr Bush's re-election effort. Jos? 'Pepe' Fanjul, president of Florida Crystals, is one of just 165 donors to have raised at least $200,000 for the 2004 campaign.

Robert Coker of US Sugar is among the 251 donors who have raised at least $100,000. Sugar companies have made $34,500 in direct contributions to Mr Bush this election cycle, part of more than $900,000 in campaign contributions by the industry to both Republicans and Democrats through November 2003.

Ricardo Reyes, a spokesman for the office of the US Trade Representative, denied direct White House intervention, saying the USTR had long warned the Australians that sugar might be excluded. "At most this was an understanding that in order to get this thing passed [in Congress] we had to keep sugar off the table," he said.

But Robert Zoellick, the US trade representative, made no public mention of the exclusion demand until a radio interview in the sugar-growing state of North Dakota late last month, just before the final round of talks with Australia.

Australia, the world's third largest sugar exporter, had been hoping for inroads into the US as part of the deal. But the sugar industry launched a massive lobbying effort after the US agreed in December to a small increase in sugar imports as part of the Central American free trade agreement with five nations.

US sugar quotas have resulted in a domestic sugar price averaging twice the world price in the past 20 years. Currently it is nearly four times the international price.



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