U.S. Trade Representatives office reallocates sugar quotas

The Hagstrom Report

The Office of the United States Trade Representative announced country-specific reallocations of the fiscal year 2017 in-quota quantity of the World Trade Organization tariff-rate quota for imported raw cane sugar.

Based on consultations with quota holding countries, USTR is reallocating 86,495 metric tons of raw value of the original TRQ for raw cane sugar from countries unable to fill previously allocated, FY 2017 WTO raw sugar TRQ quantities, according to a statement from the USTR.

The allocations reflect TRQs that allow countries to export specified quantities of a product to the United States at a relatively low tariff, but subject all imports of the product above a pre-determined threshold to a higher tariff.

Last week, the Agriculture Department announced it was increasing the amount of sugar that can enter the country at a low tariff due to additional supplies of raw cane sugar required in the U.S. market.

USDA said it will closely monitor stocks, consumption, imports and all sugar market and program variables, and may make adjustments during FY 2017 if needed.

The Sweetener Users Association, which represents candy companies and other industrial-scale sugar users, praised the increase while the American Sugar Alliance, which represents the domestic cane and beet growers, said it could lead to oversupplies and low prices.

“Uncertainty in the sugar market has only increased since the amended U.S.-Mexico suspension agreements made the bad deal that is the U.S. sugar program worse for American companies and consumers,” according a statement from the Sweeteners Association.

“Because it is widely anticipated that Mexico will be unable to supply the full amount of U.S. needs during the coming fiscal year, it is likely that USDA will again need to consider a TRQ increase in the near future,” the release stated.

“America’s sweetener users will continue to work with USDA and, as appropriate, request additional TRQ increases to ensure the market is adequately supplied. In addition, we will continue working with Congress to reform the U.S. sugar program to provide USDA more flexibility to allow sugar imports when necessary.”

The American Sugar Alliance said, “Domestic refined sugar prices have been depressed for the past five years because Mexico’s subsidized sugar industry violated U.S. trade law. Its dumping disrupted the sugar market, injured U.S. producers, and starved America’s refineries of needed raw sugar supplies.

“And June’s revised agreement between the U.S. and Mexican governments to end these trade abuses doesn’t officially take hold until Oct. 1,” the American Sugar Alliance continued.

“America’s sugar producers are concerned that the recent TRQ increase will likely lead to an oversupplied market and continue to apply downward pricing pressure on U.S. producers during this important transition period. We are also worried that USDA’s supply and demand forecasts used as the basis for this announcement might change, which could exacerbate the problem.

“U.S. sugar producers will continue to monitor market conditions and are dedicated to working closely with the USDA to provide the data and feedback it needs to operate no-cost U.S. sugar policy as Congress intended,” ASA said. ❖