At the same time the White House plans to renegotiate NAFTA, the Trump administration says it will collect antidumping and countervailing duties on sugar from Mexico unless that country agrees to limit shipments to the U.S. Domestic sugar growers applauded the Commerce Department warning, but food and beverage makers said it would mean artificially high prices for sweeteners.
The Commerce Department said it would collect the duties starting June 5 unless a new agreement is reached. The duties were suspended in December 2014 after Mexico agreed to control its shipments to the U.S. market. American sugar farmers and refiners complained that Mexican sugar was being sold at unfairly low prices. The government agreed.
“While I regret that such measures are needed, it is my hope Mexico and the United States can reach a fair agreement before June,” said Commerce Secretary Wilbur Ross in a statement. Negotiations are at an impasse, said the Commerce Department. After a review requested by the sugar industry, the department said last December that the 2014 agreement to limit shipments was not working.
The economic ministry in Mexico blamed the standoff on excessive demands by the U.S. sugar industry, reported Reuters. The ministry said U.S. negotiators want to eliminate “all competition” from Mexico in sales of refined sugar.
The United States restricts sugar imports and domestic marketing to assure a floor price to growers at no net cost to taxpayers. The sugar support system operates through USDA loans that set a minimum price for sugar, with the government taking ownership of sugar during periods when market prices are below the loan rate.
However, the 1994 North American Free Trade Agreement called for a gradual liberalization of the sweetener trade between the United States and Mexico. Sugar from Mexico achieved duty-free status in 2008. In February 2014, U.S. growers and processors filed the dumping complaints that led to the agreement to limit shipments.
This year, Mexico was to ship no more than 995,000 tonnes of sugar to U.S. buyers out of total exports of 1.163 million tonnes. Just as the United States is the largest market for Mexican sugar, Mexico is the largest U.S. supplier, accounting for 37 percent of imports this year, according to USDA estimates.
“We’ve lost more than $4 billion since their dumping began,” said the American Sugar Alliance, speaking for growers and processors. “The time has come to stand up for U.S. jobs.”
The Sweetener Users Association said the U.S.–Mexico suspension agreements “do the exact opposite” of assuring an adequate supply of sugar at reasonable prices. Looking beyond the current dispute, the association of food makers said Congress must enact meaningful reforms to the federal sugar program in the 2018 farm bill.