Suspension Agreements Help Growers

Canadian election agenda will impact TPP

Published in the October 2015 Issue Published online: Oct 25, 2015 Luther Markwart | Executive Vice President
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It is no secret that we have a huge beet crop for harvest this year.

With factories and harvest starting earlier, we will be adding production into the 2014/15 year (ending Sept. 30) and pushing up ending stocks to about 160,000+ tons higher than the target set out in the suspension agreements with Mexico.

Industry leaders wisely understood that good weather could give us increases in production beyond our expectations or control. That is why your leaders wisely recommended that under the suspension agreements with Mexico, the U.S. government should not grant them the entire remaining access to our market too early for the upcoming fiscal year. The suspension agreements gradually provide the right amount of access to Mexico as the U.S. harvest and processing of both the beet and cane crops are more certain.

A market collapse due to large crops and premature imports harms both U.S. producers as well as the Mexican exporters. We must be able to sell our entire crop without prices collapsing which would also restrict Mexican access. Presuming the anti-dumping and countervailing suspension agreements stay in place, the proper administration of them will help provide the returns needed by growers and not restrict U.S. marketing.

Mexico

The results of the anti-dumping and countervailing investigations by the Department of Commerce are to be announced Sept. 16. We remain optimistic that its investigation will conclude that Mexican subsidies to their industry have occurred and have significantly harmed our industry and our taxpayers by dumping Mexican exports into our market below what they sell sugar for in their own market.

Also on Sept. 16, the U.S. International Trade Commission will hold a day-long hearing to assess if the Mexican subsidies and dumping have caused injury and if that injury would likely continue if the suspension agreements or import restrictions were not kept in place. Many grower and processor leaders are scheduled to attend this historic hearing and our industry voices will be heard as our industry leaders make our case that injury is likely to occur without the suspension agreements or duties in place. The suspension agreements are essential to address the problem.

TPP

The Trans-Pacific Partnership negotiations continue to press forward on a bilateral basis attempting to find agreement on the really tough issues between the countries participating. Australia has fought hard to gain significantly higher amounts of sugar exports to the U.S. market that would have to be taken away from Mexico under the suspension agreements. Mexico has pushed back strongly threatening to block imports of high fructose corn syrup from the U.S. if our negotiators give Australia significantly more sugar access at their expense.

The Canadian negotiators have also pressed for more market access, but such requests are frankly ridiculous. They produce only one-tenth of the sugar they consume. Canada already has access for some 16,000-20,000 tons of refined beet sugar, 40,000 tons of sugar in the form of sugarbeets grown in Ontario and processed in the U.S. and hundreds of thousands of tons of sugar in sugar-containing products produced in Canada from imported sugar. It should also be noted that this year Canada will celebrate the 20th year of having anti-dumping duties in place prohibiting access of U.S. produced sugar into their market. Their market access requests in sugar are simply an attempt to pick on a sensitive commodity in the U.S so they can defend their dairy, egg and poultry sectors from greater imports from the U.S. All of this is further complicated by Canadian national elections to be held in October.

The general understanding is that there will not be a final ministerial meeting scheduled until all countries are at a point to close out the negotiations. We expect that will occur sometime this fall. Given the required time the agreement must be legally scrubbed and scrutinized by Congress and the public, it is unlikely to be considered this year by Congress. But it most likely will be before the major political primaries are underway next spring. This will be the largest free-trade agreement the U.S. ever entered into, so we have to make sure it is done right. It is important to note that the Obama Administration negotiating team has been tremendous to work with and has pledged many times, both publicly and privately, that what they negotiate will not undermine the U.S. sugar program. They have been perhaps the best negotiating team to work with than any of their predecessors in the past 25 years.

Back in Session

As Congress returns from its August vacation/work period, it has less than four months to complete its work for the year. There is a great deal of work to do and with all of the holidays in the last third of the year, there are not very many legislative days left. The biggest focus will be on getting the appropriations bills passed (likely in a giant omnibus spending package) along with other contentious issues that will be used as political fodder as we head into next year’s elections.

One of those issues will be getting a biotech labeling bill through the Senate. While the House has completed its work on this issue, the Senate will be a much more difficult task given its makeup and rules. Any bill introduced will need at least 60 votes to avoid the bill being filibustered.

Mark Your Calendar

The 2016 ASGA annual meeting will be held Feb. 7-9 in Scottsdale, Ariz. It will be a great opportunity to hear from outstanding speakers about a variety of issues facing our industry and what we are doing to address them. It will be very educational, fun and warm!

Please go to our website (www.americansugarbeet.org) after Nov. 1 to see our program and make your hotel reservations. You won’t want to miss this meeting!

Presidential Campaign Trail

The Republican and Democratic presidential primaries are guaranteed to be a long trek with many twists and turns and numerous surprises. What is important to understand is that while each candidate tries to convince voters they are the best person to be president, their comments and rhetoric are also “branding” or defining their party which is important to a growing number of independent voters. Donald Trump and Bernie Sanders draw big crowds because they are very colorful presenters, and people like less scripted candidates that vent about pent-up voter frustrations.

A number of candidates have great ambitions, but in reality they are really using the national stage to gain recognition to position themselves for top government or private-sector jobs. The GOP candidates to watch to move up in the pack are Carly Fiorina and Ohio Gov. John Kasich. On the Democratic side, Vice President Joe Biden would be the most likely fallback candidate if the Clinton campaign gets in trouble. This will all take time to play itself out. It will be an interesting process to follow.