Tuesday, 14 July 2020

Sugar Protectionism and the Eternal Struggle

In Costa Rica, sugar producers are asking the government to raise tariffs or entry taxes on imports, and importers are opposing, as this would raise the final price to the consumer.

In July 2019, the iga Agrícola Industrial de la Caña de Azúcar (LAICA) – Sugar Cane Industrial Agricultural League – asked the Ministry of Economy, Industry and Commerce (MEIC) – Ministerio de Economía, Industria y Comercio  – to launch an investigation with the aim of imposing additional tariffs on imported sugar, arguing that purchases from abroad would damage local production.

The importers are against it, since according to them there is no threat because they estimate that the sugar bought abroad represents less than 10% of local consumption.

As part of the investigation process, the public hearing between interested parties was held on January 20.

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At the hearing, Lucrecia Brenes, legal advisor to the importers said “… What we have had is a presentation on whether it is convenient to apply a new tax to the import of sugar, hence it is important to remember that imports already maintain a high tax burden, since a 45% tariff is paid, plus a 1% tax and, additionally, an antidumping measure of 3.67% was set. We are the second country to have the highest taxes on sugar imports and today the sugar sector claims that there is damage with a few imports that do not exceed 10 thousand tons and they want a new tax.”

Brenes added that “… One of the arguments of the sugar industry is that when the sugar is not sold in the local market, it has to be sold abroad and they have given us a sales price that is 45% lower abroad than the price that the sugar producers give to the Costa Rican consumer, this means that we Costa Ricans are the ones who are subsidizing the sugar that is sold in the international market, that is to say, that from our pockets we have to pay so that the foreigners have a cheaper sugar than what we receive in the country.”

Regarding the accusation that consumption is falling because of imports, Brenes explained that “… Sugar consumption in the country is falling for other reasons because consumers no longer consume so much sugar, and LAICA argues that per capita sugar consumption has fallen by almost 6 kilos in the last two years.”

 

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