WASHINGTON — The Sweetener Users Association (S.U.A.) has requested the U.S. Department of Commerce renegotiate bilateral sugar trade agreements with Mexico that went into effect Dec. 19, 2014, commonly referred to as “suspension agreements” because they suspended sizeable antidumping and countervailing duties on Mexican sugar exports to the United States.
“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 a letter signed by president Richard Pasco to D.O.C. secretary Penny Pritzker dated Sept. 19.
The D.O.C. and Mexico have held intermittent, confidential talks this summer, with the latest said to be last week, as the United States has sought changes in the 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. Under the North American Free Trade Agreement Mexico had unlimited, duty-free export access to the U.S. sugar market since Jan. 1, 2008. The suspension agreements in effect negated the NAFTA provisions and implemented an export quota for Mexico based on maintaining a minimum 13.5% U.S. sugar ending stocks-to-use ratio as reflected in the U.S. Department of Agriculture’s World Agricultural Supply and Demand Estimates. The suspension agreements also established floor prices for raw and refined sugar exports from Mexico to the United States, the percentage of raw and refined sugar in the export quota and other requirements.
Current changes sought by the D.O.C. are said to include, in part, revisions that ultimately will result in more raw sugar from Mexico going to U.S. cane refiners with less raw sugar bypassing refiners and going to U.S. “melting” factories and then directly to food manufacturers, as has been the case this year.
“Sugar markets have unfortunately been further distorted by the suspension agreements between the United States and Mexico,” the S.U.A. said in its letter. “Although these agreements are preferable in theory to the antidumping and countervailing duties that would otherwise apply to Mexican sugar, the pacts badly need to be renegotiated and changed to encourage a more competitive marketplace.
“In practice, the agreements have created new sugar price floors that are higher than the ones Congress voted for (in the farm bill). They have also 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.”
In its letter, the S.U.A. recommended the D.O.C. reduce the minimum prices in the suspension agreements to the support prices established by Congress, and reject requests to further increase the prices; increase the 13.5% stocks-to-use target to ensure adequate sugar supplies; increase the amount of raw sugar Mexico is required to export to the United States; and hold a public comment period on any changes to the suspension agreements before they are proposed to Mexico so U.S. food companies and other stakeholders have a chance to make their views known.
“Under no circumstances should the Department of Commerce agree to increase the reference (minimum) price for refined sugar in the current agreements,” the S.U.A. said.The S.U.A. in the letter also called on Congress to reform the U.S. sugar program in the 2018 farm bill.