Commerce Department affirms Mexican sugar subsidies distort trade

By Daniel Enoch

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WASHINGTON, Sept. 17, 2015 - The Department of Commerce today affirmed its earlier ruling that Mexico has been unfairly subsidizing its sugar producers and dumping surplus sweetener into the U.S. market at less than fair value.

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The department said imports of sugar from Mexico have been sold in the U.S. at dumping margins ranging from 40.48 percent to 42.14 percent. Subsidy rates for exporters ranged from 5.78 percent to almost 44 percent, with most coming in at 38.11 percent, according to a DOC fact sheet.

The determination would normally allow the government to impose anti-dumping and countervailing duties on Mexican imports. However, Commerce in December signed agreements with the Mexican government, producers and exporters authorizing Mexico to export sugar to the U.S. without regard to any duties, but subject to export limits and minimum prices.

The antidumping agreement requires all imports of refined sugar from Mexico to be sold in the U.S. market at or above 26 cents a pound.

Thursday decision was widely expected. The issue now moves to the International Trade Commission which on Oct. 20 is scheduled to vote on whether Mexican actions have injured Americans. If the ITC rules in the U.S. sugar industry's favor, the negotiated settlement between the two governments will remain in effect.

The American Sugar Alliance, which represents sugar cane and beet growers, processors and refiners, has argued that that Mexico's trade practices were costing the U.S. industry up to $1 billion a year.

“The DOC's finding validates our claim that U.S. farmers, workers, and taxpayers were harmed by subsidized Mexican sugar flooding the U.S. market,” ASA spokesman Phillip Hayes said in an e-mail. “U.S. trade law exists to ensure that predatory trading practices like these don't drive efficient domestic industries out of business, and today proved that the process works. We expect a similarly positive outcome when the U.S. International Trade Commission issues its final ruling in the matter next month.”

Under the North American Free Trade Agreement - and under normal circumstances -- Mexico has the right to export sugar to the U.S. without tariffs or quotas.

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