The Triangular Trade

We used to trade slaves for sugar. It was a golden triangle of profit. Ships loaded with guns and cloth traded their cargoes in the Bight of Benin. The slaves purchased were then sold in the Caribbean and the proceeds reinvested in sugar and shipped back to Britain. Like cotton, sugar is eternally linked to that dubious triangular trade. We crave its sweetness but it ruins us, rotting our teeth and fattening us for an early grave. (Pomeranz, p84) The transatlantic slave trade is long gone but the image of a small band of wealthy people profiting at the expense of many is still apt. Europe's post-colonial obsession with sugar has left us with a bizarre economic regime that discriminates against the poor, promotes grotesque monopolies and robs consumers.

The slave trade had, at its heart, a perverse economic logic. There is little of logic in the EU sugar regime. (Pomeranz, p84) Consider the export subsidy programme worth up to Euro 1.4 billion (Pounds 920 million), of which more than 10 per cent went to Tate & Lyle's account last year, says Oxfam. It is a strange business. Tate & Lyle buys cane sugar from hot countries, such as Mauritius, a preferred EU trade partner. Because Europe protects its sugar growers with huge tariffs, Mauritius gets a better price for its sugar, courtesy of the higher prices paid by EU consumers. Nice for Mauritius but even nicer for Tate & Lyle because it exports sugar as well. The EU produces too much sugar -a surplus of 2.5 million tonnes every year -and in order to keep that surplus from bringing down the price in Europe, it must be exported. That requires a subsidy to bridge the huge gap between the world price of sugar, about 6 cents per lb, and the EU export price of 25 cents per lb. On every tonne of sugar we export, the EU taxpayer sends a cheque for Euro 525. (Pomeranz, p84)

The European sugar processors are operating, with the blessing of European governments, a massive tolling scheme in which they collect a subsidy from the consumer when the raw product is imported and another subsidy from the taxpayer when refined sugar is exported. Suppose the EU erected a tariff barrier and quota scheme for the car market to protect Europe's inefficient automotive industry, doubling the price of cars. (Pomeranz, p84) Suppose Toyota was importing car components at inflated cost, assembling them in Derbyshire and then collecting a subsidy from taxpayers to export the cars in order not to depress the EU market with surplus vehicles. It sounds absurd, the economic logic of some Soviet ministry, circa 1979. Yet this regime is being vigorously defended by Pascal Lamy, the EU's Trade Commissioner. Three sugar-producing countries -Brazil, Thailand and Australia -have decided to challenge this relic of mercantilism, arguing that Europe is paying illegal export subsidies to its sugar producers. The first meetings of the World Trade Organisation sugar panel, held last week at headquarters in ...