WASHINGTON, June 14, 2017 – The U.S. Commerce Department announced today a new draft a deal with Mexico to tighten the amount of refined sugar that the country can export to the U.S.
The newly revised “suspension agreement” mostly the same as the deal unveiled on June 6 and is being poured over by U.S. refiners and food manufacturers.
“America’s sugar producers appreciate the hard work of Secretaries Ross and Perdue,” said Phillip Hayes, a spokesman for the American Sugar Alliance. “We are reviewing the agreement in detail and will continue to consult with the DOC and USDA.”
The U.S. and Mexico both signed off on the deal today and Commerce said it will accept public feedback until 5 p.m. June 21.
The amended deal keeps in place the core provision that requires that 70 percent of sugar imports from Mexico be raw and allows the remaining 30 percent to be refined. That’s a significant change from the current suspension agreement that maintains a 47-53 split for raw and refined.
U.S. sugar refiners complained for years that Mexico was shipping too much refined sugar into the U.S. The industry prefers raw imports that need to be processed in U.S. mills.
Another key provision in the June 6 agreement that was kept intact is the requirement that Mexican raw sugar have a purity level of less than 99.2 percent. The current level is 99.5 and U.S. refiners have said that’s too high, allowing even raw sugar from Mexico to sometimes not require additional milling in the U.S.
One key difference that might please U.S. sugar refiners and farmers is the amended deal pushes back the date by which the USDA can announce an increase to the tariff rate quota and allow more sugar into the U.S. from April 1 to May 1. That provides a smaller window in which more imports can come into the U.S.
Outside the cap on Mexican sugar, the USDA every year sets an overall import quota for all other countries. That quota for raw sugar is about 1.2 million tons and currently cannot be raised until April 1. Afterwards, USDA can raise the quota based on domestic needs.
The new suspension agreement gives Mexico the right to fill all of that additional quota if it can and the 70-30 split and the 99.2 percent polarity restrictions do not apply to those additional imports. This was the basis of the criticism from the U.S. sugar industry. They called it a “loophole” that could allow in a flood of refined Mexican sugar.
It’s unclear if the new May 1 date for TRQ increases will soften that criticism.
The new suspension agreement would replace the current one on Oct. 1, according to Commerce.
The current suspension agreement, which keeps the U.S. from leveling stiff duties of up to 80 percent on Mexican sugar, was agreed to by Mexico in late 2014 after the U.S. accused Mexico of dumping sugar into the U.S. at below-market prices. But it wasn’t long before U.S. refiners complained that the deal wasn’t working and negotiations began last year on a new suspension agreement.
“The Department will consider the comments and rebuttal comments before making its final decision with respect to the text of any finalized amendments,” Commerce said in the announcement today. “The Department is currently scheduled to sign final amendments to the agreements by June 30, 2017.”