ITC hears testimony from US sugar industry on Mexico dumping allegations

WASHINGTON -- As the International Trade Commission prepares to vote May 9 on whether U.S. sugar producers have suffered injuries as a result of the entry of subsidies and dumped Mexican sugar into the U.S., a battle is unfolding over what the co...

WASHINGTON -- As the International Trade Commission prepares to vote May 9 on whether U.S. sugar producers have suffered injuries as a result of the entry of subsidies and dumped Mexican sugar into the U.S., a battle is unfolding over what the commission should do.

Lawyers for the Sweetener Users Association and the Mexican Sugar Chamber said April 28 that the case U.S. growers have brought against Mexican sugar imports is meritless and the ITC should determine that U.S. growers have suffered no injury.

The lawyers also said at a briefing at the National Foreign Trade Council that the International Trade Commission bar for injury is low and they would be surprised if it essentially ends the case on May 9.

The beet and cane growers have charged that Mexico dumped subsidized sugar in the U.S., reducing the U.S. price and interfering with the U.S. sugar program. The growers, organized as the American Sugar Coalition for the purpose of the case, maintain that the Mexican industry is about 20 percent government owned and that subsidies and dumping margins of 45 percent are behind the exports.

The ITC accepted a petition from the sugar growers, and the Commerce Department has also initiated an antidumping and countervailing duty investigation of imports of sugar from Mexico.


'Meritless' case

At the briefing by the users and the Mexican Sugar Chamber, Paul Rosenthal, a lawyer at the Kelley Drye firm representing the users, said his clients believe the growers have a right to bring the case, "but they don't have a good case."

Rosenthal said the case is meritless because U.S. imports from Mexico did not displace domestic sugar but replaced sugar from other countries. He also said it did not have an impact on price because the price of imported Mexican sugar was the same as U.S. sugar and that some petitioners had been "wildly profitable" during the period in question -- 2011, 2012 and 2013.

But Phillip Hayes, a spokesman for the American Sugar Alliance, the beet and cane grower group, said Mexican sugar prices for 2013 were about 3 cents higher than in the U.S. and that the sugar had to be transported to the U.S., which "by definition" meant that the sugar was being dumped in the U.S.

In addition, the lawyers for the users and the Mexican industry called on Agriculture Secretary Tom Vilsack to repeat the recent testimony he gave to the House Agriculture Committee that he is not enthusiastic about the case. But they also said they will not formally ask him to send a message to the ITC.

Bad timing

Irwin Altschuler, a lawyer for the Mexican Sugar Chamber, said the U.S. Department of Agriculture and the Mexican agriculture ministry maintain a consultative committee and sugar committee that keeps the sugar market "in control," and that the existence of this committee is another reason the ITC should rule against the case.

Altschuler said "the one word" to describe the case is "chutzpah," and that the U.S. growers are like a child who kills his parents and then throws himself on the mercy of the court on the grounds he is an orphan.


Vilsack told the House Agriculture Committee he considered the timing of the case to be bad because the U.S. government is in a variety of agriculture negotiations that could be affected. He also told reporters the growers should keep in mind that Mexico reduced its sugar exports.

Altschuler maintained that the U.S. government asked Mexico to reduce its exports to the U.S., a signal that the consultative committee is working. Rosenthal said the Mexican growers have a "mechanism" under which their government warned them prices had fallen to a low level in the U.S. and the U.S. government had asked for the reduction in imports.

The growers have said the cut in U.S. exports, which started at 600,000 metric tons and rose eventually to 1.1 million- tons, was a tiny fraction of the increase in Mexican exports to the U.S. in recent years under the North American Free Trade Agreement.

Under NAFTA, Mexico has the right to export unlimited amounts of sugar to the U.S., but not if it is subsidized or dumped.

National Corn Refiners Association President John Bode said NAFTA is "working well. We shouldn't mess it up."

Mexico has increased its imports of U.S.-produced high-fructose corn syrup from $1.5 million in 2003 to an average of $490 million in the past four years, Bode noted.

Bode said he did not fear that Mexico would reduce HFCS purchases in retaliation, but that he sees the sugar case as an example of the U.S. signing trade agreements and then turning protectionist.

He said he fears such situations might make other countries distrustful of future trade agreements with the U.S. He also said Mexico might raise questions at the World Trade Organization about whether the U.S. sugar program is legal under WTO standards.


Sweetener Users Association President Rick Pasco said the users would look for legislative opportunities to change the sugar program as soon as possible, but Bill Reinsch, president of the National Foreign Trade Council said he doubts it will be changed before the next farm bill.

Reinsch noted that the votes to maintain the sugar program have been getting closer and closer, and predicted that the advocates of change would win in the 2018 farm bill.

He also noted that the council opposes the sugar program, but maintains a neutral position on ITC cases.

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