Done deal

Commerce and Mexico counterparts cement agreement on sugar antidumping and countervailing duties

By: Chris Gillis
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Photo: Valerii__Dex / Shutterstock.com
   Quietly, on the day before the U.S. Independence Day celebrations, Commerce Secretary Wilbur Ross and Juan Carlos Baker Pineda of the Mexican government made official a newly amended U.S. countervailing duty suspension agreement on sugar from Mexico.
   At the same time, Ross and Mexican sugar representative Juan Cortina Gallardo also signed an amended antidumping duty suspension agreement on sugar from Mexico.
   President Trump, in a tweet, called the agreements “a very good one for both Mexico and the U.S.,” while the Commerce Department said “the sugar suspension agreements continue to promote stability in the U.S sugar market,” in coordination with the U.S. Department of Agriculture’s sugar program. The agreements were initially reached between the two countries June 6.
   The new countervailing duty suspension agreement updates the ratio between the quantities of refined and raw sugar that Mexico may export to the United States. In the amended antidumping agreement, the minimum prices on raw and refined sugar have been raised to ensure that Mexican sugar exports do not suppress or undercut domestic price levels, the Commerce Department said.
   The agreements also contain increased monitoring and enforcement provisions, with “stiff” penalties for non-compliance.
   Since the initial duty suspension agreements were concluded between the two countries Dec. 19, 2014, U.S. sugar cane refiners have complained of constrained access to raw Mexican sugar for their processing operations.
   “Because the changes in the [new] finalized amendments substantially decrease the proportion of sugar from Mexico that may be refined sugar and mean that a higher reference price applies to semi-refined sugar, there is a greater likelihood that sufficient sugar for further processing will be available in the U.S. market,” the Commerce Department said.
   Specifically, the reference price set by the amended duty suspension agreements for raw sugar is being raised from 22.25 cents per pound to 23 cents per pound, while the refined sugar price will increase from 26 cents per pound to 28 cents per pound.
   “This enhanced pricing structure serves to ensure that U.S. producers’ prices are not suppressed or undercut by imports of Mexican sugar, thereby ensuring that the agreements provide an adequate remedy to the U.S. domestic industry found to have been injured,” the Commerce Department added.
   According to the department, the amount of raw sugar imported from Mexico under the new duty suspension agreements will increase from 47 percent to 70 percent, ensuring a greater supply of raw sugar for U.S. sugar refiners. All raw sugar imported into the United States from Mexico must also arrive loose in the holds of bulk vessels.
   The U.S. sugar-using industry, which includes numerous makers of confectionaries and beverages, vehemently disagrees with the Trump administration’s positive view on the new duty suspension agreements with Mexico, calling them “fundamentally flawed.”
   Led by the Sweetener Users Association, these companies warned that the new duty suspension agreements will further limit access to imported sugar that is “essential to adequately supplying a U.S. market where domestic producers are only able to supply about 75 percent domestic needs.”
   The Coalition for Sugar Reform estimated that the new limits on the Mexican sugar trade will cost U.S. consumers upwards of $1 billion a year as American manufacturers that use sugar in their products will simply pass along the cost increase for sugar.