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US, Mexico reach deal to slow sugar imports

FARGO, N.D. -- The region's sugar officials aren't yet commenting, but a tentative deal would slow the flood of sugar that had plunged the region's sugar beet cooperative profits for the 2013 and 2014 crops.

FARGO, N.D. -- The region's sugar officials aren't yet commenting, but a tentative deal would slow the flood of sugar that had plunged the region's sugar beet cooperative profits for the 2013 and 2014 crops.

The U.S. Department of Commerce on Monday announced it had initialed draft agreements with the Government of Mexico and Mexican sugar exporters that, if adopted, will suspend anti-dumping and countervailing duty investigations of imports of Mexican sugar. Among other things, they would ensure there is not an oversupply of Mexican sugar to cause price declines that threaten U.S. farmers and refiners.

Philip Hayes, spokesman for the American Sugar Alliance, said his organization will release a statement on Tuesday, Oct. 28. Officials of American Crystal Sugar Co., the nation's largest sugar beet company, declined to comment on the agreement until they can take time to study it. American Crystal growers were paid $300 million less for the 2013 crop than they were for their 2012 crop, and cooperative stock values are declining.

The DOC, in its news release, said the agreement would prevent imports from being concentrated during certain times of the year, limit the amount of refined sugar that can enter the U.S. market, and establish a floor price to guard against undercutting or suppression of U.S. price.

April investigation

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Investigations were started in April 2014 after the U.S. sugar industry filed petitions alleging the industry lost $1 billion because of unfair pricing and subsidies on Mexican sugar. The DOC preliminarily determined that sugar from Mexico had been sold in the U.S. at dumping margins ranging from 39.54 percent to 47.26 percent.

The Reuters news service said the deal defuses a dispute in which Mexico threatened to take U.S. support for its sugar industry to the World Trade Organization and could have led to retaliatory duties on U.S. corn fructose exports to Mexico. The news organization quoted an unnamed trade lawyer as saying Mexico had demanded 1 million tons of sugar exports as part of a deal, but details couldn't immediately be confirmed.

The extra sugar in the U.S. triggered forfeitures of sugar under loan to the U.S. Department of Agriculture and figured heavily into steep declines in sugar beet payments to farmers in the Red River Valley and around the country.

The agreement will allow Mexican sugar to continue to enter the U.S. without penalty duties and creates "mechanisms," or formulas to ensure that "unfairly traded imports of Mexican sugar do not cause injury to U.S. sugar producers."

Nov. 10 comments

Draft texts of the agreements will be available for a comment period through Nov. 10 and the agreement could become final on Nov. 26, according to sources.

Stefan Selig, DOC undersecretary for international trade, said the agreements "should provide critical stability in a market that is important to both countries, while ensuring that farmers and sugar refiners in the U.S. have an opportunity to compete on a level playing field."

This goes beyond the countervailing duty investigation released on Aug. 26, which found that "countervalable subsidies" by the Mexicans and imposed preliminary duties from 2.99 to 17.01 percent. If the Oct. 27 agreement is finalized, those duties will not be imposed.

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Assistant Secretary of Commerce for Enforcement and Compliance Paul Piquado said the agreements will "work in concert with the U.S. sugar program" and "effectively address the market-distorting effects of any unfairly traded sugar."

Mikkel Pates is an agricultural journalist, creating print, online and television stories for Agweek magazine and Agweek TV.
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