OFFICIAL TOUTS TARIFF-BASED SUGAR SYSTEM QUOTA PROGRAM CHANGES EYED

OFFICIAL TOUTS TARIFF-BASED SUGAR SYSTEM QUOTA PROGRAM CHANGES EYED

Changing the U.S. sugar import system from quotas to a tariff-based regimen would allow the United States to meet its international trade obligations and would provide the same protections to the U.S. industry as the current system, Deputy U.S. Trade Representative Julius Katz said Tuesday.

U.S. officials are weighing ways to change the import quota system to bring it in line with a decision last year by a panel of the General Agreement on Tariffs and Trade. Following a complaint brought by Australia, the GATT ruled that the way in which the United States operated its program was illegal. The United States agreed but has not yet said how or when it will change the program.Over the past few weeks, however, administration officials have pointed to a so-called "tariff-rate quota" as a possible solution. Under such a regime a fixed amount of sugar would be imported at a low tariff and any sugar imported above that amount would be charged a very high tariff.

Mr. Katz Tuesday told a Senate Agriculture subcommittee the Bush administration has not yet made a decision on how to comply with the GATT ruling, but said, "it is evident that the tariff-rate quota option most clearly permits the administration to implement the program in compliance with US domestic law and the GATT. The effect on U.S. producers, processors and users would be exactly the same as it is now under the current program."

Mr. Katz's comments were a strong indication the administration is leaning toward a tariff-rate quota as a solution. However, the change does have critics, and some in the industry are worried the tariff- rate quota system would not provide U.S. producers the same level of protection they enjoy under the current strict quota system.

Mr. Katz told the subcommittee that USTR would soon begin consulting with Congress and the administration on the Australia case and added, "I think we're close to coming to some interim conclusions." He also said he believed the administration had authority to switch to a tariff-rate quota without seeking legislation.

Mr. Katz told reporters following his testimony that the administration had no time frame for making a change. He added that the administration did not believe the change to a tariff system would run contrary to the U.S.-Canada free trade agreement.