Sugar users argue against validity of Commerce duty on Mexico sugar

Commerce Department in August slapped countervailing duties on Mexico sugar imports citing subsidies of 3 to 17 percent.    The primary advocate for businesses that use sugar has released a new white paper aimed at ending countervailing duties imposed on Mexican sugar imports by the U.S. Commerce Department.
   In August, the Commerce Department declared that sugar exports from Mexico were being unfairly subsidized from 3 percent to 17 percent and instructed Customs and Border Protection to require cash duty deposits on sugar imports from Mexico based on the preliminary rates.
   The decision was denounced by the Mexican government as well as trade advocates. Companies that use vast volumes of sugar, such as confectioners and soft drink makers, have long fought to lower trade barriers on U.S. sugar imports. Their lobbying organization, the Sweetener Users Association, released a white paper Thursday arguing that U.S. sugar interests have long artificially driven up the price of consumer goods.
   The paper, Consumers Are Paying the Price for the Sugar Producers’ Trade Case vs. Mexico, analyzes the economic impact of the antidumping and countervailing duty cases filed originally in March by U.S. sugar producers against Mexican sugar imports. A decision on the antidumping case is due soon.
   “The U.S. sugar program is a bad deal for consumers at the best of times,” wrote Tom Earley, vice president of Agralytica Consulting and a consultant for SUA. “It is even worse when U.S. sugar companies try to compel the government to further reduce sugar imports. In late March they filed trade cases with the U.S. International Trade Commission accusing Mexican sugar producers of dumping and the Mexican government of illegally subsidizing its domestic sugar industry.
   “Filing of the trade cases has driven refined sugar prices up by more than 40 percent – from 26.5 cents per pound in March to 37.5 cents in September. If prices remain at 37.5 cents, that extra 11 cents per pound will cost consumers an additional $2.4 billion over the course of the fiscal year that just started on Oct. 1.”
   In the paper, Earley wrote that is on top of additional costs already incurred.
   “For the six months following the filing of the trade cases, U.S. refined sugar prices have averaged 7.6 cents per pound higher than in the prior six months,” he wrote. “With annual consumption of refined sugar estimated by USDA at 11 million tons, that extra 7.6 cents works out to $837 million dollars in additional consumer costs over the last six months, above and beyond the costs already imposed by the sugar program.”
   The American Sugar Coalition and its constituent members have argued that dumped and subsidized sugar exports from Mexico harm U.S. sugar producers and workers.
   But trade analysts argue that those domestic producers also receive subsidies, and enforcing duties on Mexican imports undermines the intent of the North American Free Trade Agreement.
   “What the North American Free Trade Agreement accomplished—an end to Mexico’s sugar export quota to the United States—is being undercut by the actions of the U.S. sugar industry and the decision by the Department of Commerce to slap countervailing duties on Mexican sugar imports,” Andrés Rozental, a non-resident fellow at the Brookings Institute, wrote in August. “It is a well-known fact that the U.S. sugar industry itself receives huge domestic subsidies through price support mechanisms that clearly violate international trade rules. Mexico has been a reliable provider of sugar to the U.S. market and in turn imports considerable amounts of high fructose corn syrup for its soft drink and other industries. The actions by the American Sugar Coalition are nothing more than protectionist attempts to reduce competitive imports from Mexico.”