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Published May 09, 2014, 12:06 PM

UPDATED: ITC rules American producers unfairly hurt by Mexican competition

The U.S. sugar industry’s campaign against what it says is unfair Mexican competition won a victory today.

By: Jonathan Knutson, Agweek

The U.S. sugar industry’s campaign against what it says is unfair Mexican competition won a victory May 9.

A preliminary ruling by the U.S. International Trade Commission, on a 5-0 vote, found that U.S. sugar growers have been hurt by subsidized sugar imports from Mexico. The decision clears the way for further investigation.

“There is a reasonable indication that a U.S. industry is materially injured by reason of imports of sugar from Mexico that are allegedly subsidized and sold in the United States at less than fair value,” according to an ITC news release.

The ITC report will be available after June 9, according to the ITC website

Now, the U.S. Department of Commerce will continue to investigate Mexican sugar imports, with a preliminary countervailing duty determination due on or about June 24 and its antidumping duty determination due on or about Sept. 4, according to ITC.

Final rulings from the International Trade Commission and Commerce Department may not come until early 2015.

If U.S. authorities do conclude that Mexican sugar has enjoyed an unfair advantage, new duties, or taxes, would be imposed on Mexican sugar exported into the United States.

Doing so would ensure that Mexican and U.S. sugar producers are “playing on a level field,” said Phillip Hayes, a spokesman for the Washington, D.C.-based American Sugar Alliance.

The duty, if installed, would be in place for five years, he says

The U.S. Sugar Alliance, whose members include beet and cane growers, filed antidumping and countervailing duty petitions with the ITC in March.

“We’re very pleased with today’s ruling. We have a very strong case here, and the U.S. government apparently agrees with us,” Hayes said, describing the ruling as “a big step.”

David Berg, president of American Crystal Sugar, a Moorhead, Minn.-based sugar beet cooperative, said he’s not able to discuss the ruling.

He said his company will not issue a statement on the ruling, relying instead on statements from the American Sugar Alliance.

But on May 7, Berg told editors of The Grand Forks (N.D.) Herald that he was optimistic the U.S. sugar industry had made a strong case to the ITC. He also said imported Mexican sugar was hurting the U.S. sugar industry.

In a written statement sent to Agweek, Sen. Heidi Heitkamp, D.-N.D., praised the ITC decision.

“We know that our hardworking sugar producers can compete with anyone, as long as there is an even playing field. The ITC made the right decision today to move forward with this investigation,” she said.

The ITC decision drew reaction from elsewhere in the country, too, including this written statement sent to Agweek from Rep. Bill Cassidy, a Republican who represents Louisiana’s sixth congressional district.

“As the second largest producer of sugarcane in the U.S., it’s very important to Louisiana that the International Trade Commission investigate Mexico’s illegal dumping of sugar into the U.S. market, and I am glad they are doing so now,” Cassidy said.

Second ruling

The May 9 ruling was the second victory this spring for the U.S. sugar industry

On April 18, the U.S. Department of Commerce said it will investigate Mexico’s sugar industry. That ruling and today’s ITC decision show that the federal government believes the U.S. sugar industry has legitimate grievances, Hayes said.

U.S. sugar growers, in their petition, claimed that Mexico’s actions are costing their industry $1 billion this year.

The North American Free Trade Agreement allows Mexico to export unlimited amounts of sugar to the United States, but only if that sugar isn’t subsidized or dumped. Mexico’s sugar industry isn’t nearly as efficient as America’s, with Mexico sugar capturing sales in the United States only because of dumping and unfair subsidies, Hayes said.

Dumping, in international trade, means selling a product in foreign markets for less than in the home market.

The petition filed by U.S. sugar growers notes that the U.S. government has spent $278 million in fiscal year 2013 to keep the U.S. sugar market from collapsing under the wave of subsidized Mexican imports.

Further, the U.S. Congressional Budget Office has said that lower sugar prices could lead the government to spend $390 million in fiscal years 2015-2024 because sugar prices may be low.

US sugar prices

U.S. sugar prices have plunged in the past year, reflecting record world production and growing Mexican imports.

The Mexican sugar industry has increased its U.S. market share from 9 percent in fiscal year 2012 to about 18 percent in fiscal year 2013, according to information from the U.S. Sugar Alliance.

The Mexican government owns and operates about 20 percent of the country’s sugar industry.

U.S. sugar prices have risen recently, however.

The May price of wholesale refined sugar, the price of most interest to the Upper Midwest sugar beet industry, was 29.75 cents per pound. The April price was 26.5 cents per pound.

Some of that increase may reflect expectations that less Mexican sugar eventually will enter the United States, Hayes said.

But reduced U.S. sugar beet acreage also factors into the higher sugar prices, he said.

So do production problems in key sugar-producing countries, including cyclones in Australia and drought in Brazil, he said.

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