Commerce agrees Mexico unfairly subsidizes sugar exports to U.S.

By Daniel Enoch

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WASHINGTON, Aug. 27 - The U.S. Department of Commerce (DOC) said Mexican sugar subsidies are giving the country's sugar mills an unfair trade advantage and imposed duty deposits on their shipments into the U.S.

Mills operated by the Mexican government will see a 17.01 percent duty deposit; sugar produced by the company GAM will face a 2.99 percent duty, while all other sugar from Mexico will see a 14.87 percent duty, according to the American Sugar Alliance (ASA). The decision involving so-called countervailing duties is preliminary. Thus the duty deposits will be collected until the government makes a final determination. The duties could go into effect as early as next week.

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The ASA filed the complaint charging unfair Mexican subsidies in March. The producers group also alleged that Mexico was dumping its surplus sugar into the U.S. at prices below the cost of production. The Commerce Department is scheduled to issue a preliminary ruling on the antidumping petition in October. 

“The DOC's 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,” said Phillip Hayes, a spokesman for the ASA. “The preliminary duties are important and we fully expect the final countervailing duties will be higher.”

The U.S. International Trade Commission (ITC) issued a preliminary ruling in May that there is evidence that Mexico's dumping and subsidization is injuring U.S. interests.  ASA says Mexico's unfair practices are costing the U.S. industry about $1 billion a year. Final determinations by both the DOC and ITC will likely be made early next year.

Before the duty deposits were imposed, Mexican producers said they were willing to limit exports in a bid to eliminate the tariffs. Juan Cortina, president of the Mexican sugar chamber, told Reuters his industry is prepared to agree to a deal, but said any agreement would have to fix an export minimum of at least 1 million metric tons per annual cycle. 

In July, a bipartisan group of lawmakers asked COD to think twice before imposing import quotas on sugar from Mexico to resolve its anti-dumping inquiry, saying they feared an increase in sugar prices. The group of senators, led by Jeanne Shaheen, D-N.H., and Pat Toomey, R-Pa., said they oppose any potential agreement that would raise food prices for Americans by limiting imports.

“Such a suspension agreement will violate our nation's commitment to free and open trade with Mexico, threaten the viability of American food manufacturers and raise food prices for American families,” they said in a letter to the department.

Trade with Mexico is supposed to be unfettered under terms of the North American Free Trade Agreement.

The Sweetener Users Association, which represents U.S. candy makers, said no one should be surprised by a ruling that the Mexican government supports the country's sugar industry.

“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. 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.”

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