Senator urges caution in sugar trade deal with Mexico

by Ron Sterk
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Liquid sugar
Letter to D.O.C. seeks to protect U.S. liquid sugar producers.

WASHINGTON — Tennessee Senator Lamar Alexander in an Oct. 18 letter on behalf of Unilever and the J.M. Smucker Co. urged the U.S. Department of Commerce to “carefully consider any potential impacts” changes to a bilateral trade agreement between the United States and Mexico may have on liquid sugar producers.

Senator Lamar Alexander
Tennessee Senator Lamar Alexander

“It appears that efforts are being made to change the most recent Anti-Dumping and Countervailing Duty Suspension Agreement with Mexico to require sugar imported from Mexico to be sold only to refineries that granulate and crystalize sugar,” Mr. Alexander said in the letter to D.O.C. secretary Penny Pritzker. “This is problematic because there are refineries in the U.S. that only produce liquid sugar, which is used by a number of domestic manufacturers such as Unilever and Smucker’s. Restricting imports could reduce competition and harm domestic liquid sugar refiners, as well as the manufacturers and producers these refiners supply.”

Since the suspension agreements have been in place, two major U.S. refiners that depend on imported raw sugar have experienced supply shortages because much of the sugar imported from Mexico has bypassed them and gone directly to melters to produce liquid sugar. To ensure raw sugar supplies for those refiners who depend on imports, trade sources indicated that one proposed solution would be to require imports from Mexico can go only to refiners who produce granulated sugar, which would exclude those who only melt sugar, as indicated in Mr. Alexander’s letter.

Granulated sugar
One proposed solution is to require imports from Mexico can go only to refiners who produce granulated sugar.

Mr. Alexander urged the D.O.C. to “carefully consider any potential impacts this proposal could have on liquid sugar refiners, their customers and consumers” before modifying the 2014 suspension agreements. The letter noted that Unilever and Smucker have thousands of employees in Tennessee.

The D.O.C. and Mexico have held intermittent talks since the summer as the United States has sought changes in the suspension trade agreements, which were implemented to replace sizable duties on U.S. imports of sugar from Mexico after U.S. sugar producers successfully accused Mexico of dumping subsidized sugar on the U.S. market.

The Sweetener Users Association (S.U.A.) in a Sept. 19 letter to Ms. Pritzker requested the D.O.C. renegotiate the suspension agreements.

“Industrial users of sugar do not want the suspension agreements thrown out, because then punitive tariffs would cut off virtually all sugar trade with Mexico. Instead, we support renegotiation of the deals — but to improve them, not make them even worse and further harm refiners and consumers,” the S.U.A. said in its letter. “(The agreements) have unnecessarily distorted the flow of raw and refined sugar from Mexico to the United States, leaving coastal cane sugar refiners short of supplies they need to make use of their refining capacity. Since our members rely on these refiners for sugar supplies, their predicament is a concern to us as well.” 
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