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Wallet Syndrome: What You Should Know About Grocery Store Prices
By limiting foreign competition in the American market with import taxes known
as tariffs and quotas that restrict the amount of product that can be imported,
our government makes imported items scarce and drives up their cost. Let's
look at a few examples: thanks to import restrictions and high import taxes,
the price of raw sugar in the United States is 109.3 percent higher than the
world market price. The price of butter is 60 percent higher while cheese
prices are 40 percent higher on average. Ice cream and other frozen desserts
are 20 percent higher than they would be if we really had free world markets.
Trade restraint programs on sugar and dairy have been in place for decades. But every year new products come under the gun. Take imported shrimp, for example. Because of a trade case recently brought by less efficient U.S. shrimp producers that will result in new import taxes on this product, the price of shrimp will inevitably go up.
While some Americans are happy to pay more in order to protect the jobs of American farmers, shrimpers, and food producers, not all Americans can afford to do so, and yet they are not given a choice. Tariffs are a hidden tax that policy-makers agree to behind closed doors in Washington. Hardest hit are low-income Americans, such as single-parent families, minorities, and senior citizens. These low-income demographic groups devote the largest share of their incomes on food, which makes tariffs a regressive tax.
How can we reduce this burden on American consumers while at the same time opening up markets for our most productive farmers? The answer lies in the current round of negotiations taking place under the auspices of the World Trade Organization (WTO). The WTO is an international organization that consists of 150 member countries that are currently working to reduce trade barriers on a multilateral basis. It is important that all participating nations reduce their barriers to imports equally and at the same time so that no country is at an advantage or disadvantage.
Liberalized trade in food items would benefit American farmers and food producers enormously. As other countries lower their tariffs and import quotas on American products, our products become less expensive in those countries, and more people will be able to afford them. Thus, sales will increase overseas. While exports now account for about 25 percent of farm income, the potential for that percentage to increase is enormous as we gain greater access to markets in Japan, Europe, and elsewhere. American farmers are, in fact, some of the most productive and competitive in the world, and don't need to fear international trade. Free trade in agricultural products will enormously benefit our farm sector and our economy.
Likewise, as we eliminate tariffs on imported food items here in the U.S. the selection of food items in stores will increase while prices will drop. The U.S. International Trade Commission has estimated that if the U.S. were to eliminate trade barriers on the majority of its food imports, the U.S. economy would gain $3 billion annually, and new jobs would be created in industries that process and export food. That's quite a boon!
While the members of the
World Trade Organization may still be a good two years away from completing
negotiations on agriculture and other sectors, consumers should not wait until
then to urge their representatives in Congress to support the negotiations.
Our legislators need to be reminded that each and every one of their constituents
is a consumer who will benefit from successful trade negotiations. Eliminating
trade restrictions will benefit Americans more than any barrier to food trade
ever could.