WASHINGTON, April 23, 2014 - The U.S. International Trade Commission (ITC) last week heard dueling testimony from U.S. sugar producers and their Mexican counterparts as well as U.S. sugar-using companies on whether Mexico is exporting sweetener into the U.S. at prices below the cost of production – a practice known as dumping. The commission scheduled a vote on the issue on May 9 in a process that could lead to duties on Mexican sugar.
U.S sugar producers submitted their anti-dumping complaint with the ITC last month. They also filed a complaint with Commerce Department, which announced Friday it would begin its own investigation.
Robert Cassidy, a lawyer representing the American Sugar Coalition, told an ITC panel that Mexico is exploiting its status under the North American Free Trade Agreement, dumping sugar on the U.S. market at margins of 45 percent. The sugar provisions of NAFTA removed all duties and quantitative restrictions on sweetener trade between Mexico and the U.S. as of 2008.
Cassidy said Mexican imports doubled in the last year, pushing prices to the lowest in a decade. Sugar cane and beet farmers testified that the price they’re getting for sugar has been cut in half since 2012.
“Unless Mexico is stopped from flooding the U.S. market, sugar beet farmers in Wyoming and 10 other states are not going to be able to cover their costs,” said John Snyder, a Wyoming farmer and president of the American Sugar Beet Growers.
David Berg, president of the American Crystal Sugar Co., said the sugar industry as a whole will likely have an aggregate loss of almost $1 billion by the end of the 2014 crop year. Berg also said his company will lose $98 million, which he ascribed to “excess imports from Mexico.”
Berg and others who testified for the U.S. sugar producers painted a picture of an industry that could go out of business due to what they said was unfair competition from Mexico.
However, Irwin Altschuler, a lawyer for the Mexican Sugar Chamber, told the panel that U.S. sugar processors and producers are protected by the U.S. sugar program, which he called “the Rolls Royce of safety nets.”
The sugar program is designed to guarantee the price received by sugar crop growers and processors and is intended to operate at “no cost” to the U.S. Treasury. USDA controls supply by limiting the amount of sugar that processors can sell domestically under “marketing allotments” and restricting imports.
“The real culprit is not Mexico -- it’s the U.S. sugar program,” the Sweetener Users Association, representing U.S. companies that use sugar in their business operations, said in a statement.
Juan Cortina, president of the Mexican Sugar Chamber, said his country has cooperated with the U.S. government in regards to its sugar exports by diverting sweetener away from the U.S. toward the world market. Agriculture Secretary Tom Vilsack mentioned this at a recent House Agriculture Committee hearing, where he also said the anti-dumping petition was “ill-timed.”
Tom Earley, vice president of Agralytica, an agriculture consulting firm, testified on behalf of the Sweetener Users Association. He said U.S. sugar prices soared above the world price before 2012 due to the provisions of the sugar program included in the 2008 farm bill. This incentivized growers in Mexico and the U.S. to increase production, which built a surplus and led to lower prices.
“One cannot claim that imports from Mexico reduced U.S. sugar production or the market share of U.S. producers,” he said. “Where we are now is well within the parameters of how the government-managed U.S. sugar market normally behaves.”
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