Mexico, confectioners fight proposed sugar duty

Published online: May 01, 2014
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U.S. sweetened product manufacturers and a Mexican sugar industry representative argued during an April 28 press conference that low American sugar prices are a result of a market-distorting federal sugar program rather than the illegal dumping of Mexican sugar.

The U.S. Department of Commerce recently launched an investigation into U.S. sugar producers’ allegations that Mexico’s sugar industry has dumped subsidized sugar onto the U.S. market below fair value, in violation of trade agreements. The growers claim prices have dropped by 50 percent since 2011 as a result, and they stand to lose $1 billion during this crop year alone.

American sugar producers hope temporary protective tariffs will be implemented on Mexican sugar imports by this August while the investigation into the allegations continues.

Presenters at the press conference, hosted in Washington, D.C., by the National Foreign Trade Council, included leaders with the Sweetener Users Association, the Corn Refiners Association and Mexican Sugar Chamber attorney Irwin Altschuler.

“While the producers have every right to bring the case, that does not mean it has merit,” said Jennifer Cummings, a spokeswoman for sugar product manufacturers with the Coalition for Sugar Reform. “If the sugar program were reformed, we wouldn’t see these drastic swings in price. It’s a government-controlled market on the U.S. side. Mexico is just being thrown out as a culprit.”

Cummings issued a press release prior to the press conference highlighting the Congressional Budget Office’s April forecast, anticipating U.S. taxpayers will pay $629 million during the next decade to support the sugar program.

Phillip Hayes, a spokesman for growers represented by the American Sugar Alliance, pointed out the forecast assumes Mexico will continue dumping sugar into the U.S. Moreover, he believes the prediction illustrates the importance of taking quick and decisive action to address Mexican imports.

“It’s interesting to me that in the morning, a group would criticize injury being done to U.S. taxpayers as a result of Mexico and then by afternoon host a press conference criticizing the use of tools under U.S. law to address that injury,” Hayes said.

U.S. sugar policy, which was retained in the 2014 Farm Bill despite strong opposition by confectioners, allows USDA to slow foreign imports to levels set in trade agreements, limit the amount of sugar American farmers can sell and divert surpluses caused by excessive production into non-food use. There’s no limit on Mexican imports.

Hayes said many of the same companies now taking issue with the sugar producers’ petition—including Hershey Foods, ADM, Cargill and Tate & Lyle—have successfully argued anti-dumping and countervailing duty cases in the past, and Mexico imposed duties on U.S. high fructose corn syrup, citing anti-dumping laws, to protect its own sugar industry from 1998-2002.

World sugar prices have begun to strengthen recently due to a cyclone in Australia and predictions of drought damage in Brazil, which should provide some relief to U.S. growers as other countries with sugar export quotas into the U.S. may opt to sell closer to home instead, Hayes said.