While the sugar dispute between the U.S. and Mexico may look like a standoff, the U.S. has the upper hand because its refiners would be happy to get the imports they need from elsewhere, according to U.S. industry officials and government data.
The U.S. is demanding that Mexico agree to a new suspension agreement that limits the amount of Mexican sugar exports in return for U.S. willingness to forgo antidumping and countervailing duties.
Under the current suspension agreement, Mexico is allowed to export up to 53 percent of its sugar as refined product, but U.S. refiners have accused the country of going beyond that limit. So, the U.S. is now demanding that limit on refined sugar be lowered to just 15 percent, with the remaining 85 percent mandated to be raw.
When the U.S. is flooded with refined sugar, it pushes down prices and hurts domestic refineries that depend on a constant supply of raw sugar.
So far, Mexico has refused to comply, but the U.S. Commerce Department, which is leading the talks with Mexico, has shown no sign of backing down.
On May 1, Commerce officials walked away from talks with Mexico without a new deal on how to control the country’s sugar exports. Secretary Wilbur Ross announced an impasse and said the department told Mexico the U.S. would have to begin collecting antidumping and countervailing duties on sugar imports by June 5.
There’s a real possibility that could happen, industry sources say. The U.S. needs sugar imports, and refiners prefer those imports to be raw so that they can refine them, but they don’t need the supplies to come from Mexico.
“This is not a negotiation,” said Phillip Hayes, a spokesman for the American Sugar Alliance. “Mexico was found guilty of violating U.S. trade law. This is the United States telling Mexico what it must do to stop dumping sugar and causing injury.”
The Commerce Department ruled in September that Mexico was subsidizing its sugar imports, allowing exporters to dump product into the U.S. at 40 percent below market prices.
Source: www.agri-pulse.com