WASHINGTON, D.C.—The U.S. sugar industry has asked the federal government to enact protective tariffs in response to the alleged dumping of heavily subsidized sugar on their market by Mexican producers.
Fully vetting the claim could take upwards of a year, but a temporary tariff could be enacted by August, said American Sugar Alliance spokesman Phillip Hayes.
The U.S. Department of Commerce has 20 days to decide whether to initiate the case, and the U.S. International Trade Commission has 45 days to determine if injury has been caused.
American sugar producers have alleged they stand to lose $1 billion in sales of their 2013 crop due to prices that are half of 2011 levels, though U.S. sugar acres have held steady. Furthermore, the U.S. government has spent $250 million in tax dollars to purchase and divert surplus sugar from the food market. Prior to the government's recent intervention, Hayes said, U.S. sugar policy posed no direct taxpayer expense from 2008-2012.
The federal government would be tasked with setting an appropriate tariff rate. ASA estimates the U.S. is importing Mexican sugar at 45 percent below the fair price in Mexico.
Though there are no tariffs or quotas on Mexican sugar into the U.S. under the North American Free Trade Agreement, Hayes said long-standing policy prevents foreign producers from selling commodities in the U.S. below fair value. Furthermore, countervailing duties offer protection from the sale of subsidized commodities into the U.S.
Hayes said the Mexican government owns about 20 percent of its sugar industry and guarantees artificially high prices for its growers. Mexican producers also benefit from preferential loans and debt forgiveness, he said.
“In our petition we noted the reason it appears Mexico has done this is to fuel its expansion of its sugar industry,” Hayes said.
The petition estimates Mexican sugar represented 17.8 percent of the U.S. market share in the 2012-2013 fiscal year, compared with 9 percent during the prior year.
Sugar buyers with the Sweetener Users Association issued a brief response to the petition: “The growers have the right to file these actions under U.S. law, but that does not necessarily mean that their case has merit. The U.S. and Mexico have just marked 20 years under NAFTA, and the trading relationship is a very important one. It is vital that trade complaints of this type be adjudicated in an objective and even-handed manner.”
Once enacted, a sugar duty would be subject to an annual review—and potential revisions—by the U.S. Department of Commerce. The U.S. International Trade Commission would hold a sunset review every five years to determine if the U.S. sugar industry still needs protection from “material injury.”
“This is not something we wanted to do. We’ve called it an act of last resort,” Hayes said. “We feel the facts are very straightforward and would be difficult to dispute.”
Vic Jaro, president and CEO of Idaho-based Amalgamated Sugar Co., said U.S. sugar producers are united in their support of the petition.
“We don’t need all of that Mexican sugar coming in here,” said Ken Horsch, Aberdeen, Idaho, sugarbeet farmer.