The Reagan administration is considering imposition of sugar import quotas for the first time since 1974 to spare the expense of buying and storing thousands of tons of this year's domestic crop.
The proposal, to be reviewed by the Cabinet Council on Food and Agriculture today, has been hung up for weeks in discussions on whether the quotas should be imposed on a global or country-by-country basis, according to administration sources.
Proponents of a country-by-country approach, who tend to be clustered in the State Department, argue that it would allow the administration latitude to give preferential treatment to nations granted trade concessions under the recently announced Caribbean Basin initiative.
That system would anger such allies as Australia, Brazil and the Philippines, all major exporters of sugar to the United States, and may run afoul of the General Agreement on Tariffs and Trade, which calls for evenhanded application of quotas.
The quota proposal also has been encountering flak from domestic sugar consumers and processors, who say the planned trade restrictions could force consumers to pay as much as $1 billion more each year for sugar.
These various difficulties confirm the administration's worst fears about last year's enactment by Congress of a domestic sugar price support program, an act that is the root of the quotas imbroglio.
The administration withdrew its initial opposition to the price support system as part of a deal for southern votes on the budget.
In the first year of the four-year price support program, the Department of Agriculture's Commodity Credit Corporation has agreed to pay 16.75 cents per pound to any domestic sugar grower who wishes to take that price as of Oct. 1.
When the administration announced the plan last December, it made clear it had no intention of spending any money to buy sugar. At the time, that seemed to be a reasonably safe assumption.
But since the Jan. 1, a glut has driven the worldwide price of sugar down by about one-third, to just above 9 cents per pound. Fees, duties and transportation costs raise the price of imported sugar, and consequently domestic, to 18.5 cents per pound, a figure Agriculture Department economists consider to be a penny or two below the price that would make the government's standing offer no longer attractive.
Since fees and duties are at the maximum level the GATT permits, the only other way to push up the domestic price is with quotas.
Widespread speculation over the past few weeks that quotas are on the way has driven down the world price, over fears of being shut out of the U.S. market later, and pushed up the domestic price on the sugar commodities market, which concerns future prices. It has also launched a flurry of countermoves on the political front.
Rep. Peter A. Peyser (D-N.Y.), who led an effort last year to keep sugar price supports out of the farm bill, this week introduced a bill to kill the price support program.
Meanwhile, the U.S. Cane Sugar Refiners' Association, which fears that quotas would drive up prices and produce spot shortages, has threatened to sue the government, claiming that the Agriculture Act of 1933 forbids simultaneous imposition of import fees and quotas.
"It's an outrageous proposal," association President Nick Kominus said yesterday. "The Reagan administration made a bad deal last year to go along with a price support program, and now to avoid any exposure to budget outlays, they're trying to squeeze the whole thing out of consumers."
Without the quotas, administration sources said, they could face a budget exposure this year of $200 million.