WASHINGTON, June 8, 2017 – The preliminary deal that the U.S. and Mexico announced on Tuesday on Mexican sugar exports hasn’t halted negotiations or pressure from lawmakers and industry groups on the Commerce Department to alter the agreement as it was laid out to the public.
Sen. Jeanne Shaheen, D-N.H., told Commerce Secretary Wilbur Ross today that she’s worried the deal will push up sugar prices for food companies and the bread, candy and cookies on grocery store shelves.
“I would hope as you work to finalize the agreement that you’ll take into consideration not only the interests of the sugar producers, but also the interests of consumers and businesses that are going to be affected,” Shaheen told Ross, who testified before a Senate Appropriations subcommittee.
When Ross and Mexican Minister of Economy Ildefonso Guajardo Villarreal unveiled the preliminary deal this week, they said some issues remained unresolved. Ross said he expected it would only be a matter of days before the deal to put tighter restrictions on Mexican sugar imports was finalized. The country had been accused of selling its sugar into U.S. markets at below the cost of production, a practice called "dumping."
Today, he told Agri-Pulse it wasn’t possible to predict how long it would take to complete the agreement.
“It’s very hard to say when a negotiation will end,” Ross said after the hearing.
But during the hearing he essentially dismissed Shaheen’s concerns about the potential for rising costs of sugar for the food companies.
“We met with the bulk of the (sugar) consuming industry groups – with the soft drink people, the food manufacturing people, the confectioners,” Ross said. “We met with them all. We understand their points of view, but it’s an unfortunate truism – whenever you’re solving a dumping problem … it does mean there will be some small increase in costs because nobody has the God-given right to buy dumped materials that are coming into the country inappropriately. So there will be some increase, but I don’t think it’s a very gigantic one.”
Gigantic or not, any price increase will hurt companies’ margins and they are vocal in their complaints.
“Through what amounts to a stealth price-support increase, the modifications will further distort U.S. sugar markets and increase prices, enriching the U.S. sugar lobby while harming U.S. consumers and the food and beverage industries and their employees,” the Sweetener Users Association said in a statement released Wednesday.
The U.S. sugar industry, a driving force behind the Commerce Department’s efforts to renegotiate the U.S.-Mexico sugar arrangement under what’s called a suspension agreement, is also unhappy with the preliminary deal, as are some lawmakers from sugar-producing states.
“While I appreciate Secretary Ross and (Agriculture Secretary Sonny) Perdue’s work to strengthen trade enforcement with Mexico, our sugar farmers still have concerns that this agreement does not go far enough,” said Sen. Debbie Stabenow, the top Democrat on the Senate Agriculture Committee. “We must ensure that this deal will protect Michigan sugar beet farmers and the 142,000 jobs this vital industry supports across the country. I encourage negotiators to work with our farmers to make improvements as the details of this agreement are finalized and as the changes are implemented.”
Under the preliminary suspension agreement, 70 percent of the sugar Mexico ships to the U.S. would be raw and have a purity level of 99.2 percent or less. That’s good for U.S. refiners who depend on a sufficient supply of raw product to run through their mills. The current deal between the two countries requires that just 53 percent of Mexican sugar be raw and have a purity level of 99.5 percent or less.
But the refiners are still urging Commerce to change the deal. That's because negotiators agreed that if the USDA decides there is not enough sugar on the U.S. market and allows in above-quota imports from Mexico, the new restrictions would not be mandatory for that sugar.
The American Sugar Alliance has called this “a loophole” thatthreatens to allow Mexico to sell too much refined product into the U.S. market.
