The US and Mexico on Tuesday reached an agreement to resolve a long-standing dispute and allow duty-free sugar imports to resume from south of the border, albeit with new conditions.
US Secretary of Commerce Wilbur Ross said the new deal would “address the flaws in the current system” and protect US sugar refiners, confectioners and soft-drink makers from harm caused by imports of subsidized Mexican sugar.
“The new agreement prevents dumping of Mexican sugar and corrects for subsidies the Mexican sugar industry received,” Ross said at a news conference with Mexican Minister of Economic Affairs Ildefonso Guajardo Villarreal.
Guajardo said the new deal, which increases the set price for raw and refined sugar, and increases the share of raw sugar exports, “protects Mexican companies and workers” and “maintains Mexico’s position as the main supplier” to the US market.
The dispute came as the two neighbors, along with Canada, are to renegotiate the North American Free Trade Agreement (NAFTA) and the officials indicated the negotiations on sugar over the past several weeks should help with those talks.
“We needed to get out of the way this very contentious issue that has been polluting the relationship between the two countries for quite some time,” Ross told reporters.
“I think it’s important to get a very hard issue like that out of the way before the big negotiations start,” he said.
Ross and Guajardo said work on the sugar deal has improved their working relationship and showed they could reach a mutually beneficial agreement.
It has “ given us the opportunity to know each other better, to really get to trust and to develop a strong relationship, that definitely will be one of best assets for coming negotiations on NAFTA,” Guajardo said.
The deal would increase the import price to US$0.23 a pound (0.45kg) of raw sugar from US$0.2225, and for refined sugar to US$0.28 per pound from US$0.26.
In addition, the share of refined sugar imported will be reduced from 53 percent to 30 percent, increasing the amount of raw sugar imports to 70 percent.
In addition, Mexico was granted “right of first refusal” to supply any excess US demand, as determined each year by the US Department of Agriculture.
However, the American Sugar Alliance objected to this “major loophole” in the deal, which it says give too much power to Mexico.
“Mexico could exploit this loophole to continue to dump subsidized sugar into the US market and short US refineries of raw sugar inputs,” alliance spokesman Phillip Hayes said in a statement.
It also allows the Mexican government the ability to determine the purity of the sugar it exports under these conditions, Hayes said.
Ross said he hopes the sugar industry will support the deal once it is finalized in the coming days.
In contrast, the Corn Refiners Association, which represents makers of corn syrup, supports the agreement which it said “maintained vulnerable export markets.”
Last year, Mexico exported 1.1 million tonnes of sugar to the US, about 40 percent of which was refined.
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