But this problem isn’t limited to Mexico. India, Brazil, and Thailand all massively subsidize the production of sugar. Brazil is, literally, spending billions in subsidies, according to the IPI report, bailing out its ethanol industry to the tune of nearly a half-billion dollars. And these four countries control more than two thirds of the global sugar market, exerting a tremendous amount of pressure on it as a result. Moreover, as any one of these nations adds additional cronyist bailouts, the others follow suit. Brazil announces a new subsidy, then Thailand and India announce theirs.
Like all other forms of cronyism and government interference, these bailouts have the secondary effect of discouraging innovation. Why innovate, when practice inefficiencies will go rewarded by the state?
At the same time, US firms are facing the double-whammy in terms of punishing their drive towards greater efficiency and productivity. Their successful efforts are met with the corrupt practices of foreign governments whose sole interest is in undercutting their market prices, while here at home they are met with a federal government that rewards them by driving up their regulatory costs, labor costs, and energy costs!
The US has to be aggressive in defending its interests, and while some (rightly) have deep concerns for the global trade treaties the US has signed, we have, nevertheless, signed them. We must be willing to use the tools at our disposal to combat what is essentially economic warfare—finding a comprehensive solution that will bring some obligatory rationality to the process.
At the same time we look at ensuring that our interests are protected vis-à-vis the predatory practices of other nations (whose goal is simple: to use their massive subsidization to destroy the US sugar marketplace), we have to recognize that we need serious reform here at home. While we shouldn’t disarm, trade-wise, it is imperative that we also recognize the deleterious impact that both a massive regulatory state and an ever-elusive set of shifting potential burdens have on US businesses.
The two go hand-in-hand. We ensure that our businesses are globally-competitive while we take the necessary steps to ensure that our economic liberties aren’t being abused by others.