Not So-Sweet A Deal ?

Commentary

June 7th, 2017 | Written by Peter Buxbaum

US Sugar Industry Opposes New US-Mexico Deal

Claims Loophole Will Allow Continued Export-Import Dumping

Source:  GLOBAL TRADE MAGAZINE

US sugar producers are complaining that an agreement announced yesterday between the United States and Mexico will allow Mexican exporters to continue to dump sugar in the US.

US Secretary of Commerce Wilbur Ross denied that contention saying,
“We have gotten the Mexican side to agree to nearly every request made by US industry to address flaws in the current system and ensure fair treatment of American sugar growers and refiners.”

At issue is an agreement to end a dispute dating back to 2014 between the US and Mexico with regard to Mexican sugar imports.
Ross and Mexican Secretary of Economy Ildefonso Guajardo announced the new agreement in principal yesterday to suspend antidumping and countervailing duties against Mexican sugar imports into the United States.

Ross contended the agreement—between the governments of the United States and Mexico and the Mexican sugar industry—prevent dumping of Mexican sugar and corrects for subsidies the Mexican sugar industry receives.

Among the elements of the agreement, the price at which raw sugar must be sold at the mill in Mexico is increased from 22.25 cents to 23 cents per pound, and for refined sugar, from 26 cents to 28 cents per pound. The new agreement also reduces the percentage of refined sugar that may be imported from 53 percent to 30 percent, increasing the amount of raw sugar available to US sugar refiners. Mexico agreed to increased enforcement measures and to accept penalties for violations, including a reduction in the amount of sugar allowed to be imported equal to twice the amount—or three times the amount, under some circumstances—of any sugar found to be in violation of the agreements.

Under a section entitled Additional US Needs, Mexico accepted these conditions in exchange for a right of first refusal to supply 100 percent of any “additional need” for sugar identified by the US Department of Agriculture after April 1 of each year.

 

It is the Additional US Needs clause that bothers Phillip Hayes, a spokesman for the American Sugar Alliance, a group representing US producers, who said the section contains a major loophole. “Mexico could exploit this loophole to continue to dump subsidized sugar into the US market and short US refineries of raw sugar inputs,” he said. “This loophole takes away the existing power of the US government to determine the type and polarity”—the degree of purity that separates raw from refined sugar—“of any additional sugar that needs to be imported and cedes that power to the Mexican government.”
Ross lamented the lack of support for the agreement among US industry, but added that “we remain hopeful that further progress can be made during the drafting process. We look forward to continuing discussions with them as we finalize the agreement.”