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Aug. 3 — U.S. and Mexican trade officials are working to broker a new deal on sugar trade to prevent U.S. antidumping duties of about 80 percent.
The new agreement would be a renegotiation of a U.S.-Mexico suspension agreement that was put into place in December 2014, following findings that Mexican sugar had been sold below market prices in the U.S. market in 2013 (246 ITD, 12/23/14).
“The Department of Commerce is engaged in consultations with the Mexican government and the Mexican sugar industry to explore concerns that have been raised about the operation of the agreements,” an official at the U.S. Department of Commerce said in an e-mail to Bloomberg BNA.
The new negotiations aim to ensure that U.S. beet and sugar cane farmers are better protected, according to Phillip Hayes, a spokesman for the American Sugar Alliance. It also could include additional requirements for refining sugar in the U.S., Hayes said, to make sure that cane sugar refiners have access to an adequate supply of raw sugar for processing.
“The suspension agreements are not market access agreements for Mexico,” Hayes said in an e-mail to Bloomberg BNA. “They are the settlement of litigation under U.S. laws in which the government of Mexico and Mexican sugar producers were found to be guilty of injuring the U.S. sugar industry.”
The 2014 suspension agreement established price limits and volume quotas for Mexican sugar exports, requiring Mexican sugar to be sold in the U.S. at or above 26 cents per pound, while all other imports of sugar from Mexico were to be sold at or above 22.25 cents per pound. It was put into place following a sugar dumping investigation by the Commerce Department, which found that in 2013, Mexican sugar had been sold in the U.S. below market price between 40.48 percent and 42.14 percent.
The suspension agreement also established periodic meetings two to three times a year between the relevant trade officials to discuss the progress of the suspension agreement. If the agreement is terminated, antidumping and countervailing duties of up to 80 percent could be applied to sugar imported from Mexico.
Sen. Jeanne Shaheen (D-N.H.), who opposes import restrictions on Mexican sugar, has expressed concern about the renegotiation of the sugar suspension agreements by the Commerce Department without allowing for public comment.
“The sugar managed trade agreements between the United States and Mexico have restricted the sugar supply available in the U.S. to a level far too low to meet domestic demand and have caused an unjustified price hike for American businesses and consumers,” Shaheen wrote in a July 21, 2016, letter to the Commerce Department. “These new trade restrictions have effectively reset government-supported sugar prices nearly 20 percent higher than the levels Congress agreed on in the 2014 Farm Bill.”
Mexican sugar industry trade officials have said they support the suspension agreement, which still gives them the preferential access to the U.S. market provided by the North American Free Trade Agreement (NAFTA) even if it falls short of the full access.
“We have a relationship in commercial terms with the U.S. market going forward that is based on a formula that was negotiated by both governments,” said Juan Cortina, the president of the Mexican Sugar Chamber. “We are left in an advantageous position as the supplier of choice. We can live with it, even if it is not something that we really like. But the rules are quite clear now.”
Other Mexican trade experts, however, note that the use of such agreements ensures that the sugar industry in the U.S. continues to be protected.
“It is a settlement. It is not free trade any more, because it is a limitation of Mexico's access to the U.S. market,” said Beatriz Leycegui, a former senior trade official in the Felipe Calderon administration and partner with SAI Consulting in Mexico City. “But these are instruments that countries can legitimately use to ensure that the conditions of trade are fair.”
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