US, Mexico Finalize Sugar Agreement - Global Trade Magazine
  July 7th, 2017 | Written by

US, Mexico Finalize Sugar Agreement

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  • Commerce: Agreement will promote stability in the US sugar market.
  • US sugar producers denounced an earlier agreement, claiming loophole allows Mexicans to dump sugar in the US.
  • Finalized agreement updates the ratio of refined and other sugar that Mexico may export to the US.

US Secretary of Commerce Wilbur Ross, and Juan Carlos Baker Pineda, Subsecretario de Comercio Exterior, Secretaría de Economía, have signed a finalized amendment to the Countervailing Duty Suspension Agreement on Sugar from Mexico.

Ross and Juan Cortina Gallardo, a representative of the Mexican Sugar Industry, signed a finalized amendment to the Antidumping Duty Suspension Agreement on Sugar from Mexico.

All major stakeholders have endorsed the deal brokered by Ross and Mexican Secretary of Economy Ildefonso Guajardo, according to the Commerce Department. The amendments will ensure that the sugar suspension agreements continue to promote stability in the U.S sugar market, in coordination with USDA’s sugar program.

On June 6, Ross and Guajardo announced an agreement in principle to amend the agreements suspending the antidumping and countervailing duty investigations on sugar from Mexico.

US sugar producers denounced that agreement, claiming a loophole will allow Mexican exporters to continue to dump sugar in the US.

On June 14, 2017, the department released for comment draft amendments to the agreements, as initialed by the signatories. The department considered the comments and rebuttal comments received from interested parties as it finalized the amendments to the agreements.

The finalized versions update certain provisions, such as—in the CVD agreement—the ratio between the quantities of refined and other sugar that Mexico may export to the United States during a given export limit period, and the polarity division between the two types of sugar.

In the amended AD agreement, the minimum prices of other sugar and refined sugar are higher to ensure that Mexican sugar imports do not suppress or undercut domestic price levels. Each amended agreement also contains enhanced monitoring and enforcement provisions such as a requirement for polarity testing and penalties for non-compliance.

Each of these elements ensures that the amended agreements provide an adequate remedy to the US domestic sugar industry against the dumping and unfair subsidization determined in the investigations.

In addition, the finalized amendments will ensure that the sugar suspension agreements continue to promote stability in the US sugar market, in coordination with USDA’s sugar program.

The AD and CVD Agreements signed by the Department and the GOM in December 2014 differentiated between refined sugar at a polarity of 99.5 degrees and above, and other sugar at a polarity less than 99.5 degrees, and provided that no more than 53 percent of Mexican exports could be of refined sugar. The finalized amendments define Refined Sugar as sugar at a polarity of 99.2 degrees and above, and other sugar as sugar at a polarity less than 99.2 degrees and shipped in bulk. Polarity refers to the degree of purity that separates raw from refined sugar.

These changes address concerns regarding ensuring an adequate supply of sugar in the US market, and concerns that a large portion of other sugar is bypassing cane refiners for direct consumption or end use.

The US industry complained that the sale of Mexican semi-refined sugar was hindering the competitiveness of US cane refiners by substantively diminishing the supply of Mexican sugar for their processing operations, and suppressing US prices for refined sugar. Because the changes in the finalized amendments substantially decrease the proportion of sugar from Mexico that may be refined sugar, there is a greater likelihood that sufficient sugar for further processing will be available in the US market.

In the finalized amendments, the reference price for other sugar is being raised from 22.25 cents per pound to 23 cents per pound, while the refined sugar price is being raised from 26 cents per pound to 28 cents per pound.