US Sugar: No Victim of Nafta

Mary Williams Walsh, in the NYT, has a good investigation of US Sugar, and the way that its managers seem to be enriching themselves at the expense of their employee-shareholders. It is unfortunate, however, that one sentence, buried in her copy, made it into the photo caption at the top which everybody reads:

In Clewiston, Fla., U.S. Sugar was known as a good citizen. But after Nafta, the company changed as it rushed to lower its costs.

The goings on at US Sugar might well be scandalous, but they have nothing to do with Nafta. Here's how the article explains what happened:

The North American Free Trade Agreement raised the prospect of a flood of cheap sugar from Mexico and other countries with low wages. U.S. Sugar scrambled to lower its costs.

Nafta happened in 1994; the actions that the article focuses on didn't start happening until the following decade, and the main action - rejecting a takeover offer at $293 a share - didn't happen until 2005.

By that point, it was obvious to everybody concerned that there was and is no "flood of cheap sugar from Mexico and other countries with low wages". Just look at the latest farm bill: it guarantees 85% of the US sugar market to US producers, who quite happily manage to charge double the global rate for their product. If there's one thing which has been blissfully unaffected by Nafta, it's sugar.

Just as the decline of sock manufacturing in the US had nothing to do with a 1984 tariff reduction, the decline in US Sugar's corporate citizenship had nothing to do with Nafta. Pretending that it might just gives management a pre-baked excuse for its actions.

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