The Impact of Globalization and Free Trade on the U.S. Sugar Policy Essay - 1

The Impact of Globalization and Free Trade on the U.S. Sugar Policy - Essay Example The larger economies will at some point influence those not globally invested as their performance begins to evolve and shape the global financial markets. There may be no other free-trade policy like the U.S. sugar program that illustrates such hypocrisy, and the need for reform. The United States has often prided itself as a world leader in terms of the free trade movement. The culture has always pushed for Globalization and the use of technology to integrate economies. However, there are some industries that remain well protected due to the strength of forceful interest groups and absence of pressure to reform. These protection barriers often hurt our domestic economy and counteract the efforts to promote more open markets and trade negotiations around the world.   The U.S. Sugar policy operates under the Farm Bill, which was overwhelmingly passed in 2008 by Congress. The basic premise behind the sugar policy is that supply should equal demand. The U.S. Department of Agriculture has imposed several tools in order to ensure that the sugar policy operates at a minimum cost to the taxpayers. These tools are that: first, they can limit foreign imports to those required in the trade agreement obligation with the exception of Mexico; second, they can control the amount of sugar the U.S. American farmers are allowed to sell; and third, the bill can divert any excess surplus of sugar into ethanol production. (American Sugar Alliance) These tools and policies such as the preferential loan agreements and tariff rate quotas, serve to effectively keep foreign sugar out of the U.S. In return this forces the price of sugar in our market to increase substantially.