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Quotas and Sugar

In: Business and Management

Submitted By rjkearns
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Government quotas and subsidies are justified at times. The US sugar policy is a long standing policy that is highly beneficial to sugar growers and a source of controversy for industries that rely on sugar.
Government quotas are enacted to benefit domestic industries. The most prevalent reasons for quotas are: protecting domestic employment, hedging against low foreign wages, protecting infant industries, combating unfair trade and ensuring notational security. Foreign imports produced overseas using workers making lower wages would enjoy pricing advantages to domestic goods, so they may have a quota set. Infant industries in a country have to build up to compete with imports that may enjoy and advantage in economies of scale. Unfair trade occurs when products are dumped onto a market at below market price, possibly even below production price, a quota would at least limit that kind of tactic. If a good is seen as important to the security of the economy, which is a national security interest quotas can help protect that industry (Import Quotas, 2013). Export subsidies encourage domestic industries to export goods by increasing the revenue businesses receive by exporting goods. This may be to compete with foreign goods that are subsidized themselves or have a lower price for any number of reasons. When used judiciously these protectionist policies can be beneficial to industries but there is a concern about how they may affect domestic consumers.
US sugar policy sets a floor for sugar prices and guarantees that price. “A study released just last week by Promar International reveals that the extra expense to consumers and other sugar users as a result of the current policy now amounts to more than $4 billion a year” (Pitts & Davis 2011).
“As an additional complication, changes in trade patterns, particularly as a result of the North American Free Trade

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