96 per cent of any Philippine deficit and other foreign countries 4 per cent. The percentages were 95 and 5 under the original 1948 Act. If any foreign country other than Cuba and the Philippines is unable to fill its share of the quota for "other foreign countries," the deficit may be prorated to other countries in the group on such basis as the Secretary shall determine. Should "other foreign countries" as a group be unable to fill their quota, the entire deficit is allocated to Cuba. Allotment of Quotas to Persons Marketing Sugar-Under Section 205, the Secretary may allot the quota for any area among persons who market or import sugar. The proration may cover whatever areas the Secretary deems necessary and such periods of time as he may designate. He is instructed to make such allotments whenever necessary to assure an orderly flow of sugar in the channels of commerce, maintain stable supplies or afford all interested parties an equitable opportunity to market sugar within any area's quota. Quotas for Refined Sugar-The Act provides in Section 207 specific maximum quantities of direct-consumption sugar for certain areas which may be marketed in continental United States each year as part of the over-all quotas for those areas. Direct-consumption sugar is defined as any sugar which is consumed or used without being further refined. These direct-consumption quotas, substantially identical with those of the 1937 Act, are as follows: Area Hawaii Puerto Rico Short tons, raw value 29,616 126,033 none 56,000* 375,000 * Tons as specified in the Philippine Trade Act of 1946, rather than raw value. The quantity of direct-consumption sugar foreign countries other than Cuba and the Philippines are allowed to send to this country is established by the 1951 amendments at 1.36 per cent of United States consumption requirements minus the total quotas for domestic areas and the Philippines. However, each such country cannot be restricted to less than the average quantity received from it in 1948, 1949 and 1950. The direct-consumption quota for foreign countries other than Cuba and the Philippines was added to the Sugar Act in 1951 and will become effective in 1953. Direct-consumption quotas for Hawaii and Puerto Rico are in addition to the quantities to be marketed there for local consumption. There are no separate quotas for direct-consumption sugar from the domestic beet or mainland cane areas. Liquid Sugar Quotas-In addition to its basic quota and its share of deficits from other areas, Cuba is permitted under Section 208 to market in the United States each year the equivalent of 7,970,558 wine gallons of liquid sugar of 72 per cent sugar content. The Dominican Republic is allowed to market each year 830,894 wine gallons. The 1951 amendments added a liquid sugar quota of 300,000 wine gallons for the British West Indies. Liquid sugar produced in domestic areas is included with other sugar in determining their quotas and in prorating deficits. The only liquid sugar which may be imported into the United States, except for minor exemptions, is that specified for Cuba, the Dominican Republic and the British West Indies. A wine gallon of liquid sugar weighs about 11.5 pounds and its sugar content, at 72 per cent, is equivalent to about 8.86 pounds, raw value. Consequently, the liquid sugar quota for Cuba is equivalent to about 35,000 tons; for the Dominican Republic, 3,600 tons; and for the British West Indies 1,300 tons, raw value. Exemptions from Quota Provisions-Under Section 211, sugar exported from the United States is not included as part of the sugar quota for any area. Sugar may be imported for the express purpose of later exporting its equivalent in the same or another form, or in manufactured articles, without being considered a part of the sugar quota for that country. Sugar imported as part of the quota for any country is removed from the quota if later exported in any form. Subsidies Paid to Producers in Domestic Areas-Producers of sugarcane and sugar beets in domestic areas under Section 301 receive subsidies, called "conditional payments," from the Federal Government provided they comply with certain specified conditions, as given on pages 129 and 130. The basic rate of the "conditional payments" is 80 cents per 100 pounds, raw value, of commercially recoverable sugar in the sugarcane or sugar beets, as provided in Section 304. Farms producing less than the equivalent of 350 tons of sugar, raw value, receive the full rate. Farms producing 350 tons or more receive smaller payments as given on page 131. In addition to "conditional payments" producers of sugarcane and sugar beets in domestic areas may receive subsidy payments under Section 303 because of the abandonment of planted acreage or a crop deficiency in all or a substantial part of the sugarcane or sugar beet crop in a factory district, county, parish, municipality, or local producing area. Suspension of Quotas-The President of the United States is authorized by Section 408 to suspend sugar quotas whenever he proclaims that a national economic or other emergency exists with respect to sugar. The quotas remain suspended until the President finds that the emergency no longer exists. The direct-consumption portions of the quotas cannot be suspended unless the President specifically proclaims that a national emergency requires their suspension. Sugar Excise Tax—The Internal Revenue Code of the United States is amended by Section 501 of the Sugar Act so as to continue the excise tax on the refining of sugar or importation of direct-consumption sugar at the rate of 50 cents per 100 pounds of sugar, raw value. The sugar excise tax is imposed on sugar entering the United States from foreign countries as well as that produced in domestic areas. However, producers of sugarcane and sugar beets in domestic areas receive subsidies from the Federal Government. The basic rate of the subsidy is higher than the rate of the excise tax. Producers of sugarcane and sugar beets in foreign countries receive no subsidy. General Agreement on Tariffs and Trade -Although the quantity of sugar which may be imported by the United States is regulated by the Sugar Act of 1948, these imports are still subject to a tariff. The latest change in the tariff rate on sugar imported into this country from Cuba became effective January 1, 1948, as part of the General Agreement on Tariffs and Trade negotiated by the United States, Cuba, and 21 other nations at Geneva in 1947. In this agreement many important tariff concessions to each other were made by the United States and Cuba. The major item on which the United States granted a concession to Cuba was sugar. The duty on raw sugar from Cuba was reduced from 75 to 50 cents per 100 pounds, and that on refined sugar from 79.5 to 53 cents. At a conference held at Torquay, England, the United States reduced its tariff on sugar from countries other than Cuba and the Philippines from 68.75 to 62.5 cents per pound, raw value, effective June 6, 1951. The tariff on sugar from Cuba remains at 50 cents. United States reductions in tariff rates on imports from Cuba made in 1948 ranged up to 50 per cent of the former rates and were made on commodities which accounted for 75 per cent of the value of this country's imports from Cuba in 1939. Duty or duty-free status was bound on commodities accounting for 22 per cent of the value of imports in that year. Concessions by Cuba to the United States fall into three groups: (1) Lowering of the import duty on 128 items Cuba imports from the United States. (2) Binding or "freezing" the duty on 330 items. (3) Exempting 492 of 497 items from payment of a World War II emergency surtax of 20 per cent on duties, and reduction from 10 to 3 per cent of a public works surtax on the duty on a few items. The concessions made by Cuba to the United States cover commodities which accounted for 95 per cent of the total value of Cuba's imports from the United States in 1939. Reductions in duty by Cuba ranged from placing certain itemsnotably raw cotton-on the free list, to the binding of present rates or duty-free status on 330 items. The binding of a rate or duty-free status is important because the bound rates cannot be changed without abrogating the treaty; otherwise the rates could be changed at any time. Chapter Seven Sugar Quotas and Supplies Original Purposes of Quotas The reasons for adopting the United States quota system were set forth by President Franklin D. Roosevelt in a message to Congress, dated February 8, 1934, in which he said: "I feel that we ought first to try out a system of quotas with the threefold object of keeping down the price of sugar to consumers, of providing for the retention of beet and cane farming within our continental limits, and also to provide against further expansion of this necessarily expensive industry." Again in 1937, when the first major change in quota legislation was being considered, President Roosevelt said in a message to Congress: "The expiration on December 31, 1937, of the quota provisions of the Jones-Costigan act and public resolution No. 109 of June 19, 1936, and the existence of the public problems which have arisen as a result of discontinuance of the processing tax on sugar and benefit payments to sugar beet and sugar cane producers, make it desirable that the Congress consider the enactment of new legislation with respect to sugar. The Jones-Costigan act has been useful and effective, and it is my belief that its principles should again be made effective. "I therefore recommend to the Congress the enactment of the sugar quota system, and its necessary complements, which will restore the operation of the principles on which the Jones-Costigan act was based. In order to accomplish this purpose adequate safeguards would be required to protect the interests of each group concerned. As a safeguard for the protection of consumers I recommend that provision be made. to prevent any possible restriction of the supply of sugar that would result in prices to consumers in excess of those reasonably necessary, together with conditional payments to producers, to maintain the domestic industry as a whole and to make the production of sugar beets and sugar cane as profitable as the production of the principal other agricultural crops. In order to protect the expansion of markets, for American exports, I recommend that no decrease be made in the shares of other countries in the total quotas. "It is also highly desirable to continue the policy, which was inherent in the Jones-Costigan act, of effectuating the principle that an industry |