Protecing the US Sugar Industry

Report
TCEE and SFASU Present:
PROTECTING THE U.S. SUGAR INDUSTRY FROM
FOREIGN OUTSOURCING: A BITTERSWEET IDEA
TO PROTECT OR NOT TO PROTECT…
WHAT IS THE ANSWER?
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What are arguments for protection?
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What are arguments against protection?
DAVID RICARDO
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Led call to repeal Corn Laws in 19th century
England
Corn meant wheat then
 Corn was called maize

Who do you think favored protection of corn?
 Who do you think did not favor protection of corn?
 Bread and flour bigger parts of diet then than now
 DR knew that other countries had better weather
conditions for growing wheat
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WHAT HAPPENS WHEN PROTECTED INDUSTRIES
ARE NO LONGER PROTECTED?

Workers?
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Machinery?
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Technology?
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Consumers?
TERMS TO KNOW
Barriers to trade: tariffs, quotas, subsidies
 Competition
 Special interest issues
 Trade adjustment assistance
 Imports and exports
 Domestic price
 World price
 Outsourcing
 Offshoring

OBJECTIVES
Students will:
Identify the gains to themselves and others, and
compare the overall benefits and costs, of policies
that alter trade barriers between nations (such as
tariff and quotas)
Explain why the benefits of trade barriers are highly
concentrated, providing higher income and
employment for producers of the protected
products, while costs are spread widely across
millions of consumers and firms that purchase the
protected product
OBJECTIVES CONTINUED…
Students will:
 Review provisions in several U.S. laws passed
in recent decades that provide special
assistance to workers who lose their jobs
because of international trade, and relate the
rationale for providing this public assistance to
workers to the distribution of costs and
benefits of policies that promote or restrict free
trade, as well as the overall gains from trade.
DO YOU LIKE ANY OF THESE PRODUCTS?
SWEET PRODUCTS

What makes these products sweet?

What happens to these products if the price of
sugar increases?

Today you will examine the effects on different
groups in the economy resulting from high sugar
prices caused by government policies that protect
U. S. sugar producers from foreign competition
TERMINOLOGY
Domestic price of a product is the price that
results when goods are traded within a country,
with only domestic sources for both demand and
supply. This is a closed economy because the
market is closed to trade from other countries.
 World price is that of a product that results when
goods are freely traded in nations all around the
world, reflecting global sources of both supply and
demand.

QUESTION???

What happens to the domestic price of a good
if imports of the products are reduced or
eliminated by laws passed in a country that had
been importing the product?

What are several policies that restrict imports?
TERMINOLOGY…
What is the definition of these terms?
Tariffs
Quotas
Subsidies
VISUAL 1
Early 19th century, tariffs on sugar to protect
Louisiana Purchase
 Southern plantation owners prior to Civil War
demanded continued protection
 1930’s import quotas placed on several products
and production subsidies paid to U.S. sugar
producers
 By 1945 many international agreements signed to
encourage international trade
 Since 1981 U.S. sugar industry one of the most
protected industries

OUTSOURCING

The sugar industry in the U. S. has a special
protection even today. Why do you think?

What is outsourcing?

View visual 2 and discuss
DEFINITION OF OUTSOURCING

Outsourcing (or contracting out) is often defined as
the delegation of non-core operations or jobs from
internal production within a business to an
external entity (such as a subcontractor) that
specializes in the operation.

It is the management and/or day-to-day execution
of an entire business function by third party
service provider. Source: Wikipedia
IS THIS OUTSOURCING?

The local hospital has hired a local company
called Sanitizers-R-Us to perform all of its
housekeeping services, from mopping floors to
cleaning beds, surgical areas, and linens. The
workers who perform these duties are
employees of Sanitizers-R-Us, not the hospital.

Is this an example of outsourcing?
WHAT IS OFFSHORING?

What do you think it is?

View Visual 3 (next slide)
OFFSHORING

Offshoring is the movement of a business
process done at a local company to a foreign
country, regardless of whether the work done in
the foreign country is still performed by the
local company or a third party. Typically, work is
moved due to a lower cost of operations in the
foreign location.
ACTIVITY ON SUGAR
You will participate in a group activity that explores
the costs and benefits of sugar trade restrictions
form the standpoint of five different groups:
 1. U.S. sugar producers/farmers (1.1)
 2. U.S. consumers of sugar products (1.2)
 3. U. S. Taxpayers Alliance (1.3)
 4. U. S. workers helped by sugar policies (1.4)
 5. U. S. workers hurt by sugar policies (1.5)
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SHOULD US POLICIES TO PROTECT THE
DOMESTIC SUGAR INDUSTRY BE PROTECTED?
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Your handout provides information relevant to your
assigned roles.
Prepare for your role over the next 15 to 20 minutes
A. Read your role
B. Discuss important points about your role
C. Develop a brief summary in your own words
representing your role’s answer to the above question.
D. Select a spokesperson to present the summary in
one minute.
DEBATE
Opening statements by spokespersons:
identify role and key arguments in your own
words while the class takes notes.
 Debate: all students need to speak at some
point. Challenge claims made by other groups
but use a civil tone. Attack ideas and not
people. Do not call people or groups names.

AFTER THE DEBATE: PREPARE CLOSING
STATEMENTS
Consult with your small group.
 Prepare a closing statement which explains
where they stand on subsidies:
 Change wording from opening statement and
add additional information into your one minute
presentation
 Choose a new spokesperson to present
 Time: 5 minutes to prepare and one to present

WHAT DO YOU THINK IS THE BEST FOR ALL?

In your small groups, think broadly now. You
are no longer playing your role in real life. You
are not playing the role assigned for this
activity.

What do you think the policy should be for the
good of the country and its citizens?
SUMMARY OF BENEFITS AND COSTS OF
PROTECTING U.S. SUGAR PRODUCERS?
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As you read Visual 4, answer the following questions:
1. Has sugar production increased or decreased in recent decades?
2. Why?
3. Why can some countries produce sugar at a lower cost than the U. S.
producers?
4. Who in the U. S. benefits from the government policies that support the
domestic production of sugar?
5. Who in the U. S. is hurt by the government policies that support the
domestic production of sugar?
6. From the point of view of society as a whole, are the benefits of sugar
subsidies greater than their costs?
7. If U. S. sugar policies result in more costs than benefits, why are they
allowed to continue?
8. How do sugar subsidies affect relationships with U. S. trading partners?
YOUR FINAL CONCLUSION IS???
After reviewing all of the information one more
time, vote publicly whether the U. S. should
continue with its sugar protection policies.
 Would you answers change if you lived in a
different region?
 What if your parents’ income(s) is (are) tied to
the sugar industry and all subsidies are ended.
What will happen?

IF THE GOVERNMENT ENDS SUBSIDIES…
Do you believe that the government should help
workers who lose their jobs? If so, for how
long?
 Should workers who lose jobs because of
international trade issues receive more
assistance than workers who lose their jobs for
other reasons?
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TRADE ADJUSTMENT ASSISTANCE
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The U. S. and other countries have adopted
Trade Adjustment Assistance programs to
assist workers who are hurt by international
trade and, in particular, by the reduction of
termination of government policies that
protected workers in some industries from
foreign competition and imports.
ACTIVITY 2 TRADE ADJUSTMENT ASSISTANCE
PROGRAMS
Besides helping workers, the AA Programs also
help reduce opposition to agreements
 Unemployment tends to be in certain regions and
this will help reduce hard impact
 Overall gains from allowing more trade will help
provide for the above measures
 Politically these were needed to get the measures
passed
Do you think these measures should be temporary
and limited or long term and more expansive?

THE HIGH COST OF PROTECTING U. S. JOBS
Read the statistics in Activity 3
 What trends do you see?
 What are high trends and low trends?
 What types of costs are involved?
 What are secondary job losses?
 Did the U. S. protection justify these costs?
Why or why not?

PROCESS
What are the key points of the lesson?
 Who wins and loses when the U. S. sugar
producers are protected from foreign competition?
 If the overall costs of protecting U.S. sugar
production are higher than the benefits, why does
this program have enough political support to
continue?
 If sugar protection is removed, what types of
assistance would be available to workers who are
hurt by this policy change?
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