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John Schmeltzer

Candymaking jobs will continue to disappear in Chicago and other confection hubs if U.S. sugar prices--more than double the cost in other parts of the world--don't come down, say executives who have convened here for the industry's annual toast to the American sweet tooth.

"Until we get relief on sugar we have to keep looking to open plants overseas," said Salvatore Ferrara II, president of the family-owned, Forest Park-based Ferrara Pan Candy Co., a leader of the National Confectioners Association.

In the past decade, nearly half of the 13,600 candy manufacturing jobs in Chicago, the U.S. candy capital, have disappeared as companies have shifted some operations to plants in Mexico or Canada in search of cheaper sugar prices.

Brach's Confections Inc. and Ferrara have done so in recent years and last year, Chicago-based Primrose Candy Co., a Chicago-based maker of hard candy, took it a step further by moving its entire factory to China to save on sugar.

Though reluctant, many say it's a move they have to make to stay competitive.

"We're paying 14 cents to 18 cents per pound for sugar in Mexico compared with the 26 cents to 27 cents a pound we pay here," said Dean Spangler, president of Bryan, Ohio-based Spangler Candy Co., which makes lollipops, candy canes and other hard candies. "We don't have an alternative to sugar in our candy."

In contrast to the 27 cents per pound now being paid by Spangler, Ferrara and other candymakers, world sugar is selling for about 10 cents per pound.

The price varies so much because of strict quotas limiting the amount of sugar that can be imported into the United States--a longstanding, sugar industry-backed rule that could be eased under a Central American Free Trade Agreement, now under debate in Congress.

The measure moved forward in the Senate Tuesday, although senators put off for another day how to deal with the sugar industry opposition that is the biggest obstacle to passage.

Candymakers have been fighting the restriction for decades--head-on and also in creative ways. Some manufacturers have tried importing cocoa already mixed with sugar, or sugar mixed with gelatin. The cocoa mixture could be used directly in the manufacture of some candies, while the mixture with gelatin required that the blend be boiled to extract the sugar, according to industry executives.

"This stuff came to a stop in the early 1990s when U.S. customs began cracking down," said Lawrence Graham, president of the National Confectioners Association.

Graham said the future of the U.S. candy industry, the country's second-largest user of sugar, rests in part on the fate of the free trade agreement with the Central American countries.

"When I started in this job, about 10 percent of hard sugar candy was imported. Now about 40 percent of all hard sugar candy is made outside the U.S.," he said.

Hopes within the candy industry for passage of the agreement rose on Tuesday after the Senate Finance Committee agreed by a vote of 11-9 to send the agreement to the full Senate. The House Ways and Means Committee is to take up the legislation on Wednesday.

The Bush administration signed the Central American Free Trade Agreement a year ago with five nations--Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua--with the Dominican Republic added later. It now is referred to as CAFTA-DR.

It eliminates almost all tariffs on U.S. manufactured and farm goods sold to those countries. In return, those countries have promised to open their service and telecommunications industries.

As part of the deal, sugar quotas with those countries would be eliminated over a period of 15 years.

The American Sugar Alliance, a trade group that has successfully fought efforts to eliminate the country's oldest remaining farm subsidy program for the past 20 years, is battling to block the plans to eliminate the sugar quotas.

The alliance says more than two dozen other countries will be seeking similar action if the free trade agreement is adopted.

"We are fighting for our very survival, and rest assured that sugar will fight CAFTA with all the resources and tools available to our industry," said Luther Markwart, chairman of the alliance.

The free trade proposal faces opposition from many Democrats, who say labor and environmental protections in the agreement are weak, as well as opposition from lawmakers who link free trade accords to the loss of American jobs, and lawmakers from sugar industry states in the South and West.

"The sugar industry's Washington lobbyists need to catch up with market realities," said Lee McConnell vice president of Chicago-based Blommer Chocolate Co. and chairman of the Sweetener Users Association.

"The fact is, the CAFTA-DR imports that might enter in 2005-06 will be only about one-fifth of the additional sugar the market will need. Demand has been growing faster than anticipated, and acreage cutbacks mean there is a need for more imports to meet existing demand."Chicago Tribune