Producers, users react to Mexican sugar agreement

by Ron Sterk
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WASHINGTON — News that the United States and Mexico late Oct. 27 had reached a trade agreement to avoid antidumping and countervailing duties on U.S. sugar imports from Mexico elicited opposite reactions from sugar producers and users, as would be expected.

“U.S. government officials should be commended for their hard work and diligence in reaching an agreement with the Mexican government that could serve as the basis for suspending the pending countervailing duty and antidumping duty cases,” said Phillip Hayes, spokesman for the American Sugar Alliance, which represents U.S. sugar producers and was the key player in petitions to the Department of Commerce and U.S. International Trade Commission claiming Mexico was dumping subsidized sugar on the U.S. market.

“We believe that U.S. sugar producers and consumers alike will benefit if an agreement is finalized,” Mr. Hayes said. “Like our counterparts in Mexico, we want NAFTA to operate as intended and to foster free and fair trade in sugar between the countries.”

The agreement does not require any changes to U.S. sugar policy recently passed in the farm bill and does not reopen the North American Free Trade Agreement, Mr. Hayes said.

But the American Bakers Association saw the agreement differently. The baking industry uses about a fourth of total sugar used in the United States.

“While A.B.A. is still reviewing the specifics of the agreement, any further controls placed on sugar supplies is not good for bakers or all other sugar users,” said Robb MacKie, A.B.A. president and chief executive officer. “Apparently an 85% monopoly in the U.S. sugar market is not enough for domestic sugar producers. Their motives are simple – to create a 100% monopoly on sugar supplies in the U.S. It is a shame the federal government is such an enabler of this grab.”

Under U.S. sugar policy, U.S. producers are allocated 85% of projected U.S. sugar use, with the remaining 15% made up of a combination of tariff rate quota imports, which include a World Trade Organization minimum, and unlimited, duty free imports from Mexico under NAFTA, along with minor amounts from other trade agreements. The prior two years record high imports from Mexico have exceeded projected use and added to U.S. sugar ending stocks.

The draft agreement sets the minimum price for refined sugar imports from Mexico at 23.57c a lb f.o.b. and for all other sugar covered in the agreement at 20.75c a lb f.o.b., while restricting refined sugar imports to 60% of total shipments from Mexico. The deal also limits the total amount of sugar imports and provides for timing of shipments so as to minimize impact on U.S. producers.

“The agreements should provide critical stability in a market that is important to both countries, while also ensuring that farmers and sugar refiners in the United States have an opportunity to compete on a level playing field,” said Stefan Selig, undersecretary of commerce for international trade.

The D.O.C. in a preliminary determination on Aug. 26 imposed countervailing duties (anti-subsidy) of 2.99% to 17.01%, depending on the source, on U.S. imports of sugar from Mexico, indicating the D.O.C. found that exports benefited from support from the Mexican government. The D.O.C. on Oct. 27 announced a preliminary determination to impose antidumping duties of 39.54% to 47.26%, again, depending on the source of the sugar from within Mexico. Total preliminary combined duties would range from 50.25% to 56.55%.

Comments on the agreement are due to the D.O.C. by Nov. 10. If the agreement is ratified, the preliminary duties and the investigation would be suspended.

The American Sugar Coalition, a group of U.S. sugar producers that includes the American Sugar Alliance, filed antidumping and countervailing duty petitions with the D.O.C. and the I.T.C. on March 28 claiming U.S. imports of subsidized sugar from Mexico had caused about $1 billion in damage to U.S sugar producers during the 2013-14 marketing year that ended Sept. 30.

The D.O.C. on April 17 initiated an investigation of countervailing duties on U.S. sugar imports from Mexico, and the I.T.C. on May 9 made a preliminary determination of injury in the case.
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