Commerce Department rules in favor of US sugar growers in dispute over Mexican importsIn a victory for U.S. sugar growers, the Department of Commerce ruled on Aug. 26 that the Mexican government has been subsidizing sugar exported to the U.S., and issued a preliminary ruling that the U.S. will impose duties on Mexican sugar.
By: Mikkel Pates and Jerry Hagstrom, Agweek
FARGO, N.D. — In a victory for U.S. sugar growers, the Department of Commerce ruled on Aug. 26 that the Mexican government has been subsidizing sugar exported to the U.S., and issued a preliminary ruling that the U.S. will impose duties on Mexican sugar.
The 17.01 percent duty will be on sugar imported from mills owned by the Mexican government and a 2.99 percent duty will be imposed on the Mexican company GAM. Other Mexican sugar will be subject to a 14.87 percent duty deposit.
U.S. producers filed antidumping and countervailing duty petitions on March 28. The International Trade Commission in May separately made a preliminary ruling that Mexico’s subsidizing and dumping is harming U.S. interest.
The Department of Commerce is scheduled to announce its final determination on or about Jan. 7, unless the statutory deadline is extended. The ITC is scheduled to make its final injury determination approximately 45 days after the Department of Commerce issues its final determination, if affirmative. If both bodies issue affirmative final determinations, a countervailing duty order will be issued.
Paul Rutherford, president of the Red River Valley Sugarbeet Growers Association, declined comment, referring questions to Philip Hayes, spokesman for the American Sugar Alliance. American Crystal Sugar officials said the same.
In a statement, Hayes said the Aug. 26 finding “validates our claim that the flood of Mexican sugar, which is harming America’s sugar producers and workers, is subsidized by the Mexican government.” He said the preliminary duties are important and that the group expects final countervailing duties to be even higher.
“One reason for our confidence about the final determination is that the DOC is now investigating new information about Mexican subsidies,” he said, without further explanation.
Hayes said the Mexican government owns and operates 20 percent of the country’s sugar production. Mexico’s “inefficient sugar producers” benefit from other export subsidies, preferential government loans and debt forgiveness, he said, as well as “cash infusions to cover operating shortfalls, and government grant programs to finance inventory, exports and inputs.”
Juan Cortina, president of the Mexican sugar chamber, told Reuters the Mexican sugar industry is prepared to agree to a deal that limits sugar exports to the U.S., but said any agreement would have to fix an export minimum of at least 1 million metric tons per cycle. He said the chamber thinks a deal could be reached before the U.S. resolves its separate anti-dumping case in October.
Meanwhile, the Sweetener Users Association says the Aug. 26 ruling should “surprise no one.
“The only surprise in this case has been that the U.S. sugar industry — which is among the most protected and supported industries in all of agriculture — would complain about support received by Mexican growers,” the group’s statement said. “This case has been, and continues to be, a cynical effort to drive up prices for consumers and kill American jobs in the food manufacturing sector.”
Sweetener Users says Mexico has “unfairly become the scapegoat” for the “failings” of the U.S. sugar program, which cost U.S. taxpayers nearly $300 million in fiscal year 2013, and the economy 127,000 food manufacturing jobs between 1997 and 2011. It says the Congressional Budget Office forecasts the program will cost $629 million over a 10-year period between 2014 and 2024.
U.S. Department of Agriculture Undersecretary Michael Scuse in Bismarck, N.D., on Aug. 25, said sugar prices had rebounded and he didn’t expect the program will cost more than $250 million like it did during last year’s price collapse.
Sweetener Users rejects any “suspension agreement” between the U.S. and Mexico, which is governed by the North American Free Trade Agreement.
“Managed trade with Mexico would not only set a bad precedent, but could also encourage Mexican industries to file cases against U.S. exports to extract similar settlements, therefore restricting trade with Mexico even further.”