Mexico to cut refined sugar exports to US from 53% to 30%
Mexico will cut its refined sugar exports to the U.S. from 53 percent to 30 percent under a deal announced today by U.S. Commerce Secretary Wilbur Ross and Mexican Economy Minister Ildefonso Guajardo Villarreal.
The two officials announced the deal at a joint news conference at the U.S. Chamber of Commerce, but Guajardo announced it earlier on Mexican radio.
A Mexican official said a main point that had been discussed overnight related to Mexico’s “first refusal” rights, which would allow it to export more sugar than defined in the quotas when U.S. import needs increased, Reuters reported.
Ross said that the U.S. sugar industry had not yet accepted the agreement, which he described as an “agreement in principle.”
The deal is designed for Mexico to avoid the imposition of punitive tariffs due to a finding by the U.S. government that Mexico had sent the U.S. subsidized sugar and that the sugar was sold at dumped prices.
The U.S. imposed the tariffs in 2014, but Mexican and U.S. officials reached what are called “suspension agreements” to avoid the tariffs stemming from cases the U.S. sugar industry had brought to the U.S. government.
Refiners of raw sugar complained, however, that Mexico was sending semi-refined sugar to the U.S. and not sending the raw sugar that U.S. refiners needed to stay in business. The U.S. government threatened to impose the tariffs as of Monday, but extended a deadline to today to finish the negotiations.
If the U.S. did impose the tariffs, which would make Mexican sugar prohibitively expensive, Mexico threatened to retaliate by stopping purchase of high-fructose corn syrup, a product that Mexican industry has been buying from the U.S. since the North American Free Trade Agreement established tariff-free trade between the two countries.
Under NAFTA, Mexico has the right to unlimited sugar exports to the U.S. but does not have the right to send subsidized or dumped sugar north.
Ross had said he hoped the sugar dispute would be resolved before Mexico, Canada and the U.S. begin renegotiating NAFTA later this year.
John Bode, president and CEO of the Corn Refiners Association, commented: “This is a great day for American jobs. In this administration’s first major negotiation with Mexico, Secretary Ross succeeded in protecting against unfair trade practices and maintained vulnerable export markets.”
“With both sides demanding more, he coolly pursued the broader public interest,” Bode said. “Thanks to his leadership, U.S. sugar interests have much stronger protections than the previous suspension agreements without threatening the $500 million in U.S. corn sweetener exports to Mexico that support 4,000 U.S. jobs.“
“As good as this success is, it is also an excellent sign for the coming NAFTA negotiations,” Bode said. “Today’s announcement sets a thoughtful tone and positive posture for modernizing NAFTA.”
Asked about the unwillingess of the U.S. sugar industry to accept the agreement, Ross said, “The two governments have reached agreement in principle. We have to reach a definitive agreement, and we hope they will come on board.”