Dept. of Commerce: Mexican sugar subsidies distort trade

Published online: Aug 26, 2014
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WASHINGTON—The U.S. Department of Commerce (DOC) today said Mexican sugar subsidies are giving Mexico’s sugar mills an unfair trade advantage.

As a result of this preliminary ruling, a duty deposit will be collected on sugar imports from Mexico until the U.S. government can complete its investigation and make a final determination in the case. A 17.01 percent duty deposit will be imposed on sugar imported from mills operated by the Mexican government. Sugar produced by the Mexican company GAM will see a 2.99 percent duty deposit and all other Mexican sugar will be subject to a 14.87 percent duty deposit.

“The DOC’s finding validates our claim that the flood of Mexican sugar, which is harming America’s sugar producers and workers, is subsidized by the Mexican government," said Phillip Hayes, ASA spokesman. "The preliminary duties are important and we fully expect the final countervailing duties to be higher. One reason for our confidence about the final determination is that the DOC is now investigating new information about Mexican subsidies.

“We also expect a positive outcome when the DOC issues its preliminary antidumping ruling this fall.”

Mexico’s government owns and operates 20 percent of the country’s sugar production. In addition to this ownership, Mexico’s inefficient sugar producers benefit from export subsidies, preferential government loans coupled with debt forgiveness, government cash infusions to cover operating shortfalls, and government grant programs to finance inventory, exports, and inputs.

U.S. producers filed antidumping and countervailing duty petitions against Mexico’s sugar industry on March 28.

Today’s finding pertains to the countervailing duty petition.  The DOC will issue a preliminary ruling on the antidumping petition in October. The U.S. International Trade Commission (ITC) recorded a preliminary ruling in May – by a 5 to 0 vote – that there is evidence that Mexico’s dumping and subsidization is injuring U.S. interests.

Final determinations by both the DOC and ITC will likely be made early next year.