| WASHINGTON -- A Michigan company is challenging a potent
agricultural lobby in a bitter dispute over one of the world's sweetest
substances.
Heartland By-Products in Taylor has run afoul of American sugar
growers, who are insulated from world competition by a system of tariffs
on imports.
They accuse Heartland of importing sugar from Canada disguised as
molasses, which is subject to a much lower tariff than refined sugar.
Legislation now before Congress would close what the sugar growers believe
is a loophole in tariff laws that has allowed Heartland to operate.
Greg Kozak, Heartland's president, says his 60-employee company is
operating within the law. It is fighting in trade courts and in Congress
to stay in business -- even to the extent of hiring a Washington public
relations firm to help.
"Those accusing us are false," Kozak said. "They scream
circumvention, but the courts saw it in a different light."
Heartland, a subsidiary of the British-based agribusiness company, ED
& F Man, imports what Kozak calls a "sugar-syrup." The sugar
lobby refers to it as "stuffed molasses."
The product comes from a sister-company in Windsor. Heartland then
removes the sugar from this syrup, and sells it in liquid form to food
companies for use in ice cream, candy and pre-sweetened cereals.
Heartland imports about 125,000 tons of sugar a year, less than 1
percent of the total U.S. sugar market.
Jack Roney, director of economics and policy analysis for the American
Sugar Alliance, which represents sugar producers across the United States,
says Heartland is taking advantage of a loophole in tariff
classifications.
"They have created a product never thought of when our tariffs
were set," Roney said.
Sen. John Breaux, D-La., one of the biggest sugar-producing states, is
trying to close the tariff loophole by adding an amendment as a rider to a
bill on community renewal. This would subject Heartland's "stuffed
molasses" to the same tariffs as other sugar imports, raising
Heartland's import costs 100 times.
Michigan also has a substantial sugar industry based on growing and
refining sugar beets. Consequently, both Sen. Carl Levin, D-Detroit, and
Sen. Spencer Abraham, R-Auburn Hills, support the amendment.
Kozak said the amendment is just the latest in a string of attempts by
the domestic sugar industry to shut Heartland down.
Shortly after Heartland began operations in 1997, the U.S. Customs
Service raided the Taylor plant, having been told the company was
illegally importing sugar. Customs officials investigated and concluded
Heartland was operating within the law. That decision was reaffirmed in
1998, but in June 1999 customs reversed its position and said the imports
were illegal.
Heartland filed a lawsuit in the U.S. Court of International Trade, and
won. Last March, Breaux attempted to attach his amendment to an Africa
trade bill but ran into a procedural roadblock.
Roney says Heartland's volume of business is significant. The domestic
market is already oversupplied and prices in the United States are at a
22-year low. "When the market is being oversupplied, every extra ton
has a price-depressing effect," Roney said.
Heartland's lawyer, Simeon Kriesberg, says changing the tariff
classification of the sugar-syrup goes against agreements the United
States has made through the World Trade Organization.
"The WTO provides that a country which violates its trade agreements
is subject to retaliation," Kriesberg said. "The government of
Canada has already said it would view (changing the tariffs) as a
violation and would initiate a WTO case."
If it won such a case, Canada could impose retaliatory sanctions on any
U.S. imports, not just sugar. |