05 August 2015
by John Kehoe

US sugar paying millions to shut out Australia from TPP

American sugar growers are donating millions of dollars to presidential candidates including Jeb Bush and influential Congress members, as part of an aggressive lobbying campaign to shut out Australian cane growers under a planned Pacific Rim trade accord.

Trade and Investment Minister Andrew Robb is frustrated about the disproportionate influence that sugar lobbyists appear to wield over the Obama administration and Congress members in the Trans-Pacific Partnership negotiations.

A presidential election committee aligned to presidential frontrunner Mr Bush, last week disclosed a $US505,000 contribution from the US Sugar Corporation Charitable Trust, analysis of Federal Electoral Commission records shows.

The cane and beet sugar industries donated more than $US5 million to congressional candidates last year and above $US20 million over the past five election years, according to the Center for Responsive Politics.

A lack of access for Australian sugar growers to the US market was a key reason Mr Robb last week declined to sign up to the TPP that President Barack Obama is eager to conclude.

American sugar lobbyists attended the TPP meeting in Hawaii to keep up the pressure on US trade negotiators, people at the talks said.

"They're a powerful lobby and one of the biggest [financial] contributors to politics in Washington and that's being reflected by the heavy nature of our negotiations," Mr Robb said in interview with The Australian Financial Review.

Another leading Republican presidential contender from Mr Bush's sugar cane state of Florida, Senator Marco Rubio, accepted $US26,700 from the sugar lobby last year. Republican presidential aspirants, Senators Lindsey Graham and Ted Cruz, have also taken sugar donations.

The notorious influence of US sugar interests over American politicians underlines the challenge Mr Robb has in brokering a material increase above the 87,000 tonne quota allotted to Australia since 2001.

The US last week offered to raise the limit to around 150,000 tonnes but Mr Robb rejected this as inadequate and wants a greater share of the 3-4 million tonnes the US imports annually.

Former prime minister John Howard failed to convince then president George W Bush to remove sugar import barriers in the 2004 US-Australia free-trade agreement.

The US sugar program has bipartisan support among Republicans and Democrats. It severely restricts imports through quotas and guarantees US growers at least 85 per cent of domestic sugar demand of around 11 million tonnes a year.

The government also grants cheap loans to growers. If sugar prices fall below guaranteed levels, the government buys surplus domestic sugar and sells it to ethanol companies at a loss.

Sugar represents about 1 per cent of the US agriculture sector, but accounts for about 20 per cent of the farm industry's political campaign contributions.

Democratic Senator Chuck Schumer, who has been a top recipient of sugar contributions, has described the federal sugar subsidy program as "one of the most invidious, inefficient, Byzantine, special-interest, Depression-era programs ever devised".

US Trade Representative Mike Froman is restricted on what he can offer Australia, because he has been set boundaries by Congress members who will ultimately vote for or against the TPP in the legislature.

Fifteen of 100 US Senators were gifted an average of $US9,526 towards their political campaigns from sugar interests last year, while 53 of the 435 House members received $3,460 each.

Financial donations are commonplace in the US political system and politicians insist the money does not buy influence.

Florida is the biggest sugar producing state and home to the billionaire Fanjul brothers, Cuban migrants who own major sugar conglomerate, Fanjul Corp that controls Domino Sugar, Florida Crystals, C&H Sugar, Redpath Sugar and Tate & Lyle European Sugar.

The politically-connected Alfonso Fanjul is a Democrat and was the co-chairman of Bill Clinton's Florida presidential campaign in 1992.

Former first lady, Democrat Hillary Clinton, is running for the White House in 2016, though early records indicate she is yet to take any sugar money.

The other brother, Pepe Fanjul, is a Republican and was vice-chairman of finance for Republican Bob Dole's presidential campaign in 1996.

Their contributions to Democrats and Republicans were fairly evenly split in the 2014 congressional elections, with Democrats receiving $US228,680 from Fanjul Corp and Republicans $US169,150, Open Secrets calculates.

The sugar lobby reportedly spent $US26 million to help Mr Bush be elected governor of Florida in 1998, before brother George W Bush because president and declined to grant Australia a better deal.

The latest payment of more than half a million dollars came from the charitable trust of Florida sugar company, US Sugar Corporation, to the Right to Rise, the leading political action committee supporting Mr Bush's campaign for president.

Florida is a crucial swing state and presidential candidates almost certainly need to win the south eastern state to claim the White House.

The support of Messrs Bush, Rubio and Cruz for government protection for the sugar industry is curious, given all three presidential candidates purport to be strong believers in small government and free markets.

Senator Rubio has talked up his support for the local sugar industry, previously saying it was an important job creator and one "that is capable of competing with anyone in the world if the playing field is level."

"Unfortunately, the global sugar trade is not a level playing field as our foreign competitors not only create their own trade barriers but also operate with fewer regulations, fewer union commitments and meager pay," Mr Rubio wrote in an op-ed in 2012.

Warren Males, the head of economics for Australian representative group, CANEGROWERS, said Australian sugar was not subsidised. "There is no reason why unsubsidised Australian sugar should have lesser access to the U.S. than Mexican sugar which has been found to be subsidised and dumped into the US," Mr Males said on the sidelines of the TPP meeting on Friday.

The US Department of Commerce found in 2006 that for every sugar growing job saved, three were lost in the sugar-using sector.

The US food industry, including companies such as Coca Cola and Kellogs, is forced to pay almost twice the price of sugar compared to the world price, due to the restrictions on imports.

A minority group in Congress is pushing for the sugar subsidies to be elimination. Seventeen Senators earlier this year proposed the Sugar Reform Act to roll back the sugar program by claiming it has cost consumers and businesses up to $US14 billion since 2008.

Some of the Senators represent states home to companies including Lindt Chocolate, Mars, Nestle and The Hershey Company, who are forced to pay more for sugar.

The US Sweetener Users Association sent a letter to US Trade Representative Mike Froman last Thursday urging him to push for commercially meaningful liberalisation of sugar trade between TPP member countries.

"The United States needs to grant Australia commercially meaningful access for sugar, in the same way that American negotiators are – properly – insisting that other TPP countries give market access for our exports," the SUA said.