WASHINGTON, Oct. 23, 2014 – The Sweeteners Users Association (SUA) says the unfair trade complaints filed by U.S. sugar producers against Mexico sugar imports could end up costing U.S. consumers more than $3 billion in an 18 month period.
In a white paper released today, SUA, which represents large candy and soft-drink companies, said that since the complaints were filed with the government in March, refined sugar prices have jumped almost 40 percent – from 26.5 cents per pound to 37.5 cents in September. If prices remain at that level, the report maintained, that extra 11 cents will cost consumers over $2.4 billion by Oct. 1.
Tom Earley, the economist and vice president of Agralytica Consulting who authored the report, said that figure is on top $837 million in additional consumer costs incurred over the last six months, when refined sugar averaged almost 8 cents a pound higher than during the previous six months.
Early said the complaints were coming from an industry that “benefits enormously from a government price support program, government supply management, and stringent barriers against imports” from other countries.
“The U.S. sugar program is a bad deal for consumers at the best of times,” Early wrote in the report. “It is even worse when U.S. sugar companies try to compel the government to further reduce sugar imports.”
In their complaints, the sugar producers allege that government-subsidized sugar from Mexico is being dumped into the U.S. market at below the cost of production. In a preliminary ruling in August, the Commerce Department agreed that Mexico’s subsidies were giving the country’s mills an unfair trade advantage, and imposed countervailing duties as high as 17 percent against Mexican imports. Commerce is scheduled to make a preliminary ruling on the anti-dumping case next week. Final rulings are expected next year.
The U.S. International Trade Commission is also conducting a parallel investigation into whether the imports injure local growers. Its final verdict is due in February.
Duty deposits are being collected pending final determinations. In the meantime, Mexico has been pushing for a negotiated deal – a suspension agreement – that would end the dispute and possibly cap Mexican exports to the U.S at around 1 million tons, or about half of its shipments to the U.S. in the year ended Sept. 30.
“Even if the U.S. and Mexico work out some agreement to restrict Mexico’s sugar exports to the U.S. in the coming months, the implicit shorting of the market and uncertainty about how our supply deficit will be met is expected to keep U.S. sugar prices much higher than they would have been otherwise,” according to the SUA white paper.
SUA said it is urging that the cases be allowed to proceed to final injury determination at the ITC, “rather than locking in a managed trade agreement that could last for decades and cost consumers unnecessarily.”
"Under that twisted logic, a candy bar should cost less today than it did just two years ago," he said. However, sugar prices plummeted as a result of Mexico dumping subsidized sugar onto the U.S. market, and sugar is currently cheaper than it was in 2010, 2011, and 2012. "But candy prices haven’t fallen and have actually increased as confectioners look to boost their already bloated profit margins," he said.
Hayes went on to say that this is not a recent trend. "Candy makers paid the same for sugar in 2013 as they did in the 1980s, yet candy bar prices climbed 300 percent over that period."
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