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166

47.4

101

30.3

92

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79

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90

29.1

92

30.5

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6.2

1998 Volume Value

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2003 Volume

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imports and manage domestic marketing allotments and sugar payment- in-kind programs so that domestic sugar prices do not fall below effective price support levels, thereby removing the incentive for producers to for- feit their collateral. 93

US import restrictions take the form of a TRQ. Under the TRQ, a low in- quota tariff of 1.66 cents per pound is levied on imports within the quota volume. A higher overquota tariff of 7.56 cents per pound (in 2003) was levied on Mexican imports that exceed the quota volume.94 Under the 2002 Farm Act, the United States can restrict imports that exceed the min- imum import quota of 1.2 million tons bound in the WTO. The US gov- ernment assigns the raw cane sugar TRQs among 40 nations, based on sugar trade during 1975–81. In addition, the United States has a separate (albeit disputed) agreement under NAFTA that creates a separate TRQ for Mexican raw cane sugar. There are also TRQs on refined sugar, with sep- arate allocations given to Canada and Mexico. 95

By forfeiting sugar, the processor withdraws sugar from the market, thereby supporting higher US domestic sugar prices. By contrast, recourse loans would not allow sugar proces- sors to simply forfeit sugar; instead, processors would have to repay the loan, plus interest, or declare bankruptcy. See Haley and Suarez (2002).

93. The current forfeiture price or loan rate is 18 cents per pound for cane sugar and 22.9 cents per pound for beet sugar. Unlike most commodity programs, sugar loans are made to processors rather than to producers, because sugarcane and sugar beets are perishable. See Haley and Suarez (2002). For a detailed analysis of the new sugar program provisions under the 2002 Farm Act, see Jurenas (2003).

94. The US above-quota, or second-tier, tariff on Mexican sugar declined from 15.2 cents per pound of raw cane sugar in 1995 to 7.56 cents in 2003 under NAFTA schedules. In contrast, the US above-quota tariff on sugar imported from the rest of the world declined from 17.62 cents in 1995 to 15.36 cents in 2002 pursuant to WTO commitments. See Roney (2003).

95. All other countries claim refined sugar TRQs on a first-come, first-served basis.

AGRICULTURE

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