ATTEMPTING TO cure one error by making another, the Senate's trade bill provides a special tax rebate -- that is, a gift from the U. S. Treasury -- to the sugar refining companies. This gift will run to roughly $365 million, and the Reagan administration, correctly, wanted it dropped. But the Senate has now voted to keep it in the bill, providing one more item in the long list of mistakes that the House-Senate conference committee will have a responsibility to fix.
The sugar provision is not the most important part of this huge bill. But it's a timely illustration of the havoc that bad trade law can visit on innocent bystanders including industries here in this country. The sugar refiners are victims of the sugar import quotas that Congress has enacted over the years to protect the American producers of sugar cane and beets. The quotas have now forced the American price of sugar to three times the world level. That's been a disaster for the refiners. Because of the high prices of sugar, the soft-drink manufacturers -- who used to be the refiners' biggest customers -- have switched to corn sweeteners. The American refiners would like to make up for this loss by exporting more, but when they turn abroad they have to compete with the European Common Market's heavily subsidized surpluses. The American refiners are caught between the consequences of the quotas at home and European dumping abroad.
To help them, some of their friends in the Senate conceived the idea of giving them rebates on duties that they paid in years past on sugar that they imported to refine and re-export. There's no compelling logic to the rebate. It's simply a one-shot handout to try to prevent some of the mills from closing. The only thing that you can say for it is that the senators are trying to offset some of the effects of their earlier and much greater mistake in enacting the quotas.
While the refiners are genuine victims of sugar protection in this country, they are far from its greatest victims. The quotas have reduced American imports from 5 million tons in 1981 to 1 million tons this year, severely hurting small farmers in tropical countries around the world but particularly in the Caribbean. The damage done by these American quotas is not going to be remedied by the senators' proposed apology -- at the expense of the Treasury -- to the American sugar refiners