WASHINGTON, Oct. 29, 2014 – The U.S. and Mexico have reached a deal that would avert potentially steep duties on Mexico sugar imports that U.S. producers said were being unfairly subsidized and dumped into the U.S. market at below production costs.
The U.S Commerce Department said it had initialed draft agreements with the Mexican government and Mexican sugar exporters that would suspend antidumping and countervailing duty investigations against Mexico.
The investigations were launched by Commerce in April after the U.S. sugar industry filed petitions alleging that it was injured by unfair pricing and government subsidies on Mexican sugar. U.S. producers said Mexico’s practices were costing them about $1 billion a year.
Commerce said the deal, once finalized, will suspend any duties as well as create mechanisms to ensure that unfairly traded imports of Mexican sugar do not cause injury to U.S. producers. The agreements can be finalized following a 30 day comment period.
“I am pleased that we were able to reach agreement in this important matter,” said Stefan Selig, Under Secretary of Commerce for International Trade, in a news release. “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.”
The American Sugar Alliance (ASA), which brought the complaint against Mexico, commended U.S. government officials for their work in forging the agreement.
“We believe that U.S. sugar producers and consumers alike will benefit if an agreement is finalized,” the ASA said in a statement.
Phillip Hayes, a spokesman for the group, also noted that the agreements do not reopen or undermine the North American Free Trade Agreement, which provides for open and free trade among the U.S., Mexico and Canada, and will not require any changes to U.S. sugar policy in the 2014 Farm Bill.
In August, Commerce imposed duties as high as 17.01 percent on Mexican sugar imports after making a preliminary determination in its countervailing duty investigation. Yesterday, the department made a preliminary determination that imports should incur dumping tariffs ranging from 39.54 percent to 47.26 percent. If the agreements are finalized, the investigations will be suspended and no duties will be imposed.
The agreements also include measures that will prevent imports from being concentrated during certain times of the year, limit the amount of refined sugar that may enter the U.S. market and establish minimum price mechanisms to guard against undercutting U.S. prices artificially low.
Additionally, Mexican producers agreed to sell at a minimum of 23.57 cents per pound for refined sugar and 20.75 cents per pound for raw sugar.
Before the deal was announced, Mexico had been threatening to bring a complaint to the World Trade Organization over the U.S. sugar program and impose its own tariffs against U.S. goods.
Assistant Secretary of Commerce for Enforcement and Compliance Paul Piquado, who initialed the drafts, praised the agreements for resolving the U.S. industry’s concerns while allowing stable trade between Mexico and the United States.
“We believe these Agreements, which work in concert with the U.S. sugar program, effectively address the market-distorting effects of any unfairly traded sugar,” Piquado said.
Mexico is one of the largest suppliers of sugar to the U.S., where domestic producers cannot fully meet demand from consumers, including major candy companies and soft-drink makers. Those companies, represented by the Sweetener Users Association, had urged the Commerce Department not to accept a deal – called a suspension agreement – that would limit supplies coming into the U.S.
U.S. Sen. Charles Grassley, R-Iowa, said the agreement is “good news” for Iowa corn growers. In a conference call this morning, Grassley said there was concern that Mexico might retaliate by placing duties on U.S. exports of high fructose corn syrup. Now that concern has been lifted, he said.
(This story was updated at 11:50 a.m. Eastern time.)
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