Washington is once again massively screwing up the American sugar market. Because American farmers cannot compete with foreign sugar growers, the federal government has maintained an array of sugar import quotas and/or tariffs for most of the last 200 years. The regulatory regime has provided windfalls for generations of politicians and jobs for legions of bureaucrats while destroying more than a hundred thousand private, productive jobs.

It’s Getting Worse

The sugar regime is back in the news thanks to a squabble over Mexican sugar imports. Mexico is by far the largest sugar supplier to the U.S., exporting more sugar here than all other nations combined. This is a huge windfall for Mexico because U.S. prices are routinely double or triple the world sugar price.

NAFTA was never intended to result in free trade.

As part of the North American Free Trade Agreement (NAFTA), Mexico was granted special access to the U.S. market. However, Mexican and U.S. government officials strongly disagree over the details of how many benefits were promised to Mexican sugar growers. The years-long controversy recently spurred the Mexican government to cancel all sugar export permits.

The sugar squabble is typical of NAFTA’s convoluted rules and helps explain why the final deal was more than 1700 pages long. NAFTA was never intended to result in free trade. Instead, NAFTA is a trade preference agreement akin to the “imperial preference” that Great Britain once provided for members of the British Empire.

NAFTA did not reduce U.S. trade barriers for the entire world, but instead specially lowered many barriers for two trading partners. NAFTA actually gives Mexico an incentive to lobby to perpetuate U.S. trade barriers – at least on every other nation.

Poisoned By Managed Trade

Free trade is a font of good will between nations. But NAFTA-style managed trade sows as many disputes as there are lawyers. The sugar hubbub is only one of an array of squabbles that impeded willing sellers from reaching voluntary agreements with willing buyers on the other side of the border.