This action is necessary to defend the domestic sugar support program mandated by Congress last year and prevent massive imports which could displace domestic sugar and require the U.S. Government to purchase sugar at a cost of up to $400 million. The action is precipitated by our inability to defend the domestic program with duties and fees alone in view of a continued sharp drop in the world sugar price, now below 9 cents a pound. The world price has fallen 30 percent in 4 months in the face of a prospectively large world crop.

The administration has taken a number of steps to maintain the domestic price of sugar since the enactment of the price support program by Congress in December. On December 23, I proclaimed an import system, including import duties and fees, under authority of section 22 of the Agricultural Adjustment Act of 1933 as amended. On April 1, import fees were adjusted upward, based on a 20-day world average price of 11.69 cents for late February and early March. On April 23, import fees were increased by an additional 1 cent.

The ability to use import fees under section 22 is limited, however, by a statutory restriction on the level of fee that can be applied. At present depressed world prices, this level is inadequate to prevent imports from coming into the domestic market at a price below the domestic support price mandated by current law.

The quotas will be applied non-discriminatorily on an historical basis. The Presidential proclamation will provide for quotas to be apportioned among exporting countries according to percentage performance of those countries in 1975 - 1981, a period during which no restrictive quotas were in effect. Each country's high and low years will be excluded in order to assure a fair and representative allocation of quotas.

The size of the total quota will be determined and announced quarterly by the Secretary of Agriculture. The present import duty of 2.8 cents a pound, raw basis, will be continued. The section 22 import fees will be continued but will be adjusted as our domestic price responds to the quota.

The objective is to defend the domestic price support program by creating a market situation that will enable U.S. beet and cane producers to sell in the market rather than forfeiting their production to the Commodity Credit Corporation. The interests of foreign suppliers are also protected since this system provides such suppliers reasonable access to a stable, higher priced U.S. market.

In arriving at this decision, we have taken fully into account the Caribbean Basin Initiative. The historical formula chosen to allocate quotas among countries fully reflects the traditional role of Caribbean Basin countries in our sugar market.

In separate action, steps are also being taken to provide Caribbean Basin sugar producers with additional financial assistance during the remainder of this year beyond that already proposed in the Caribbean Basin Initiative legislation and normal budget requests.