The Political Interest

By Michael Kramer

Few political mantras are incanted as reverentially as "free trade" -- and few are ignored as hypocritically in practice. The latest folly involves the Caribbean Basin Initiative, a program begun in 1983 to assist 28 Caribbean and Latin American nations. By most measures, the CBI has failed. Its intelligent premise -- trade, not aid -- has never been fully realized. Pro-protection interests have consistently crippled Latin attempts to sell products in the U.S. on a cost-effective basis. Now Oregon Senator Bob Packwood is leading a charge on behalf of the region's apparel and footwear industries, an effort most everyone believes will be killed by domestic union opposition.

What's worse, unless George Bush changes course and breathes life into his free-trade rhetoric by assaulting the U.S.'s insane sugar program, Latin America's economy will deteriorate even further -- and the $800 million assistance package the President plans for Nicaragua and Panama will have little or no long-term benefit.

Unlike most farm programs, the sugar quotas guarantee all U.S. producers a profit by inflating prices to double the worldwide level while severely restricting imports. The big winners are the nation's 12,600 sugar producers, who are enriched by about $260,000 a year apiece in excess profits. The big losers are U.S. consumers: the sugar program amounts to a hidden sales tax of more than $3 billion a year.

Not only are sugar quotas bad consumer policy, they are also bad trade policy. The international group concerned with such matters calls the U.S. sugar scheme an unfair trade practice, an ironic finding given Washington's pique at other nations. As foreign policy, the sugar program is an unmitigated disaster. In the CBI nations, where sugar is the most important export commodity after coffee, more than 400,000 jobs have been lost since 1982 because of sugar protectionism, and the CBI's few positive effects have been wiped out.

None of this has gone unnoticed. In 1988, with trade representative Clayton Yeutter screaming loudest, the Reagan Administration declared U.S. sugar policy an abomination and tried unsuccessfully to change it. As Bush's Agriculture Secretary, Yeutter has apparently flipped. The Administration's proposed farm-program reforms leave sugar policy intact.

Why? "Because the sugar lobby is too powerful," concedes an Administration official. "Too powerful" is putting it mildly. Public Voice, a Washington consumer watchdog group, will soon release a survey showing that between 1985 and 1989, even liberal Democrats took significant sums from Big Sugar's political-action committees -- men like House Speaker Tom Foley ($26,500), House Democratic whip Bill Gray ($14,500) and Senators Al Gore ($13,500) and Paul Simon ($15,250). All have voted with Big Sugar in the past and will probably do so again when New Jersey Senator Bill Bradley's reform bill comes to the floor later this spring.

"It's like this," says Louisiana Senator Bennett Johnston, whose state is the nation's second largest sugarcane producer. "I see reform as a job-for- job loss to Latin America. You say I have a vested interest? You're damn right I do." Says a Bush aide: "Fact is, we need the support of Democrats like Bennett, which makes sugar the lowest of low priorities." An honest explanation. And a rotten one too.