Official: NAFTA withdrawal would mean 15 cent Mexican sugar tariff |

Official: NAFTA withdrawal would mean 15 cent Mexican sugar tariff

Jason Hafemeister, trade adviser to Agriculture Secretary Sonny Perdue, speaks to the International Sweetener Colloquium in Orlando on Feb. 12.
The Hagstrom Report |

NAFTA withdrawal would mean 100 percent Mexican tariff on HFCS

ORLANDO — If President Donald Trump withdraws from the North American Free Trade Agreement, the Mexican tariff on high-fructose corn syrup, the sweetener produced in the United States, would rise to 100 to 150 percent of its value, analysts said at the International Sweetener Colloquium.

“It would kill trade dead,” said Tom Earley of vice president of Analytica, a Virginia consulting firm, who moderated a panel on the U.S. sweetener outlook.

Mexican imports of HFCS, the primary sweetener in U.S. soda drinks, have risen dramatically under NAFTA, which eliminated tariffs between the United States and Mexico.

Under NAFTA, Mexican exports of sugar to the United States have soared and so have U.S. exports of HFCS. The Mexican market has become particularly important to the U.S. corn industry because there has been a shift in U.S. consumer sentiment away from HFCS and some food companies have reduced its use or eliminated it in favor of sugar.

ORLANDO — If President Donald Trump withdraws from the North American Free Trade Agreement, the U.S. tariff on sugar imports from Mexico would revert to the 15 cents per pound level in place before NAFTA went into effect, Jason Hafemeister, trade adviser to Agriculture Secretary Sonny Perdue, told the International Sweetener Colloquium, a meeting of sweetener users Feb. 15.

Responding to a question from Rick Pasco, president of the Sweetener Users Association, Hafemeister explained that NAFTA eliminated the U.S. tariff on sugar, but Mexican sugar imports to the United States are currently restricted because the U.S. government found that Mexico was subsidizing and dumping sugar in the United States.

The United States could have imposed duties, but instead reached suspension agreements with Mexico that protect the U.S. sugar industry from unfair trade, he added.

If NAFTA is terminated, Hafemeister said, the tariff “would bounce back” to the allowed tariff under World Trade Organization rules — 15 cents per pound, close to 100 percent of the sugar price.

The suspension agreements “would still be there on paper,” but would not be the dominant factor in U.S.-Mexican sugar trade, he said.

Analysts in the audience said that Mexico, which exports 1.2 million tons of sugar to the United States per year, would lose the U.S. market because its sugar would be too high to be competitive.

Mexico has a tariff rate quota of 7,000 tons duty free, but in comparison with 1.2 million tons it is not a meaningful tariff rate quota, the analysts said.

The United States would still need to import sugar and would have to find it in markets other than Mexico. The work of the USDA officials who run the U.S. sugar program “would get very complicated,” Hafemeister said.

Pasco said the Sweetener Users have joined other U.S. agriculture groups in urging Trump not to withdraw from NAFTA.

In other remarks, Hafemeister said that while NAFTA has generally been great for U.S. agriculture, Canada’s unwillingness to open its dairy, egg and poultry markets is a “big blemish” on the agreement.

Hafemeister said U.S. negotiators also believe that Canada engages in “discriminatory wine marketing,” and that there are problems with Canada’s wheat grading system.

The decision of the 11 other countries in the Trans Pacific Partnership negotiations to move forward with their agreement without the United States since Trump withdrew “is not a good development for us,” he said. It means that Canada, New Zealand and Australia will gain access to the markets in the Asian countries that are in the TPP11, he added.

Noting that the U.S. rice industry did not support TPP and that the U.S. dairy industry was “lukewarm” when the TPP went to Congress, Hafemeister said that he would like “an opportunity for a better deal.”

Hafemeister noted that the U.S. and Korean negotiators are renegotiating the Korean-U.S. Free Trade Agreement, but he said that most of the issues in that negotiation are nonagricultural.

The United States has many agricultural trade conflicts with China, Hafemeister said, adding that he “would love an opportunity to get into a negotiation with China” that would improve that country’s economic performance and therefore create the circumstances for the Chinese to buy more U.S. food products.