December 23, 1981

I have today signed two proclamations imposing import fees and increasing duties on sugar. The proclamations were made necessary by enactment of the 1981 Agriculture and Food Act's price support program for domestic sugar.

The high price support level for domestic sugar (16.75¢ in FY 82) creates an opportunity for foreign producers to export sugar to this country. Under present world market conditions, foreign sugar can be delivered in the United States at a price less than the domestic support price. Unless duties are increased and import fees imposed, the Federal Government would have to take ownership of large quantities of sugar at a tremendous cost to the taxpayers of this country.

The import fee imposed by one of these proclamations results in a market stabilization price for sugar of 19.08¢ per pound. This price consists of the 16.75¢ purchase price plus 2.33¢ to cover adjusted average freight and related marketing costs of raw sugar.

The other proclamation raises the basic duty for raw sugar from the current level of 0.625¢ per pound to 2.8125¢, the maximum permitted by law.

The proclamations allow a limited exemption for sugar imports which were contracted for prior to June 1, 1981, and which will be brought into this country before January 1, 1982. This exemption was made as a matter of equity for foreign traders who had made contracts to sell us sugar well before congressional acceptance of the sugar provisions of the farm bill.

I personally regret the necessity for signing these proclamations. The sugar program enacted by Congress to protect higher cost domestic producers will result in higher costs for all American sugar consumers. I have directed that the import fees imposed by these proclamations be adjusted at least quarterly, so that they can be revised downward whenever possible, without incurring significant government purchases of sugar or encouraging forfeiture of sugar loans beginning in FY 83.

In addition, I realize that the sugar duties and fees may have adverse effects on our major foreign sugar suppliers, particularly those in the Caribbean Basin. I have thus asked appropriate agencies to review this question on a priority basis to see what we can do to mitigate the effects.