Senate Keeps Sugar Rebates in Trade Bill

Times Staff Writer

The Senate, striving to pass an omnibus trade bill by a Tuesday deadline, narrowly rejected an attempt Friday by the Reagan Administration to remove a provision that the Administration says could give three large sugar refiners a windfall of more than $250 million in rebates on import duties.

A coalition of senators representing sugar refiners, farmers, organized labor and consumer groups succeeded in rejecting the last-minute move by the Administration, which was spearheaded by Sen. John H. Chafee (R-R.I.) and backed by most Republicans in the Senate. The vote to kill Chafee’s amendment was 49 to 44.

However, the Administration succeeded in blocking a move by Sen. Tom Harkin (D-Iowa) to require foreigners buying more than 5% of a U.S. business or real estate enterprise to register their investments with the Commerce Department. The Harkin provision was defeated on an 83-11 vote.


Seek to Meet Deadline

The rejection of the Chafee and Harkin measures represented the growing sentiment in the Senate to kill amendments not supported by key senators behind the bill so that it can be passed by the unanimously agreed Tuesday deadline.

In rejecting the Chafee amendment to remove the sugar rebates from the bill, senators argued that such a move would cost thousands of U.S. jobs, many in economically blighted areas, because it would allow European refiners subsidized by their governments to take away America’s 3% share of the world market.

Sen. J. Bennett Johnston (D-La.), one of the leading opponents to the Chafee amendment, said it would eliminate 1,100 jobs in his home state alone. “If we don’t refine the sugar, the European Economic Community will do it for us,” he said.

Can Get 99% Rebate

Under existing law, enacted in 1982, cane sugar refiners pay duty on the raw sugar they import for processing, but they can apply for a 99% rebate of those payments when they export an equal amount of the refined product. The companies are eligible for refunds on sugar imported up to five years ago.

But a provision that slipped into the Finance Committee version of the trade bill without public hearings would allow refiners to recoup duties paid on raw sugar imported for an additional five years, all the way back to 1977.

The Administration estimates that refiners could claim a total of about $365 million in such rebates. In addition, the Agriculture Department contends that three major refiners alone--Amstar Corp., Imperial Sugar Co. and Savannah Foods & Industries--could receive up to $264 million in rebates under the provision.


On U.S. Market

Chafee said he believes that much of the refined product from raw sugar imported during the sugar glut of 1977 through 1982 was not exported but sold on the U.S. market.

The Administration was much more persuasive in its arguments involving the Harkin amendment, which would require foreign investors to disclose major U.S. holdings in businesses and real estate.

Commerce Secretary Malcolm Baldrige, Treasury Secretary James A. Baker III and departing Federal Reserve Board Chairman Paul A. Volcker had warned that the measure would inhibit foreign investment in the United States at a time when foreign capital is an increasingly important stimulus to the U.S. economy.

Seen as ‘Veto Bait’

Sen. John C. Danforth (R-Mo.), supporting the Administration position, said that because a similar provision to inhibit foreign investment is in the House version of the trade bill, passage in the Senate would cement it into the finished legislation. This, he said, would provide further “veto bait” for an Administration already unhappy with many provisions of the bills in both chambers.

The Senate substantially watered down another provision of the trade package that the Administration had warned would attract a veto, a measure involving a proposed Multinational Debt Management Authority designed to deal with billions of dollars in Third World debt.

Under a compromise approved by voice vote, senators agreed to permit the Treasury secretary to refuse to negotiate for such a new international authority if he concludes that the talks would more likely encourage debtors to default on their loans. The original version of the provision would have mandated negotiations.