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  October 29th, 2015 | Written by

USITC Finds Mexican Subsidies Harmed U.S. Sugar Producers

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  • U.S. sugar producers want NAFTA to foster free and fair sugar trade between Mexico and the U.S.
  • U.S. sugar producers first filed cases against Mexico in March 2014.
  • Economist: “Absent government intervention, sugar price would rise to reflect the cost of producing sugar.”

The U.S. International Trade Commission (ITC) confirmed last week in a 6-to-0 vote that Mexico’s sugar industry harmed American producers by dumping subsidized sugar onto the U.S. market.

The decision means that an accord signed by the U.S. and Mexican governments to establish a needs-based trading structure and stop Mexico’s abuses will remain in effect for at least five years.

U.S. sugar producers want NAFTA to operate as intended and to foster free and fair sugar trade between Mexico and the United States,” said Phillip Hayes, a spokesman for the American Sugar Alliance, an industry group. “Today’s ruling helps accomplish that goal by upholding the governments’ agreement and addressing the unfair trade practices that were injuring American farmers, workers, and taxpayers.”

Hayes explained that the ITC vote, “validates the serious claims made by sugar producers when they first filed cases against Mexico in March 2014.”

The ITC and U.S. Department of Commerce (DOC) launched antidumping and countervailing duty investigations into Mexico’s sugar industry shortly after the cases were brought.

The DOC inquiry concluded on Sept. 16 and found that Mexico’s sugar industry had benefitted from subsidy rates up to 44 percent and had shipped sugar to the United States at dumping margins of more than 42 percent. The ITC finished its examination today, ruling that these actions materially injured U.S. interests.

The American Sugar Alliance supports a congressional resolution that instructs U.S. trade officials to systematically target global sugar subsidies to foster a free market.

“Absent government intervention, the world sugar price would rise to reflect the cost of producing sugar, and America’s efficient producers could compete well on a level playing field,” said Jack Roney, director of economics and policy analysis for the American Sugar Alliance. “We have endorsed a congressional resolution to eliminate U.S. sugar policy when foreign countries eliminate theirs.”

Over the past 25 years, according to Roney, world sugar prices have barely covered half the global average cost of producing sugar.

Subsidies ranging from government checks to export subsidies and debt forgiveness in Brazil, India, Thailand, Europe, and Mexico are among the measures supporting sugar industries around the world, according to Roney.