ITC votes in favor of U.S. sugar producers in dispute with Mexico
WASHINGTON - U.S. trade officials on Tuesday found imports of sugar from Mexico injure local cane and beet growers, confirming a deal between the two countries that sets prices and a quota for imports and putting an end to an 18-month trade war.
WASHINGTON – U.S. trade officials on Tuesday found imports of sugar from Mexico injure local cane and beet growers, confirming a deal between the two countries that sets prices and a quota for imports and putting an end to an 18-month trade war.
The U.S. International Trade Commission voted unanimously “affirmative” in the final stage of a dispute, a decision that was broadly expected and likely to be seen as a win for the powerful U.S. sugar lobby.
No duties will be applied to imports from Mexico, after the two countries penned a deal late last year that suspended the tariffs and established minimum prices and quotas for imports.
“The decision does not affect the validity and terms of the suspension agreements. We don’t agree with this decision, but it’s not a surprise,” a senior Mexican government official said.
The coveted 11-million-ton U.S. market, which is protected through a complex network of import restrictions, saw volatility ahead of and during the U.S. government anti-dumping probe.
A coalition of U.S. producers, which had petitioned their government for protection against surging levels of low-priced imports, applauded the verdict.
“That cloud has gone away,” said David Berg, president of American Crystal Sugar Co. in Moorhead. “The ITC has said the U.S. sugar industry was harmed by Mexico and that suspension agreements negotiated by the U.S. and Mexico several months ago will stay in place, regulating the supply of sugar coming to the U.S. market.”
Kurt Wickstrom, president and CEO of Minn-Dak Farmers Cooperative in Wahpeton, N.D., said his co-op is happy with the decision and always knew the facts and data would lead to this outcome.
“We hope it will bring some years of stability to our growers and years of good supplies for our customers,” Wickstrom said.
The ITC decision addresses “unfair trade practices that were injuring American farmers, workers, and taxpayers,” said Phillip Hayes, a spokesman for the American Sugar Alliance.
The final decision would bring a measure of certainty in the market, said traders.
“People know now what the rules are,” said Frank Jenkins, a veteran U.S. trader and president at JSG Commodities in Norwalk, Conn.
Stopping a flood
Berg said the ITC decision is a positive step toward preventing “unsustainably low” prices for U.S. sugar producers because it keeps the lid on the flow of subsidized Mexican sugar. He said that if not for the decision, unfair Mexican sugar imports could have pushed some producers out of business. He declined to speculate which companies might have been most vulnerable, or if Red River Valley companies would be among them.
“With prices we had in 2012 and 2013, all sugar producers were vulnerable,” he said.
Berg, who is a member of Mexico Task Force between the U.S. and Mexican sugar industries that helped shape the deal, said the ITC decision was just. He acknowledged the decision can be appealed, however, or the agreement administratively reviewed.
“We have mechanisms in the U.S. sugar program to make sure that supply is regulated so that prices stay above the statutory loan rate set by Congress,” Berg said. “Well, if the USDA can’t regulate the supply of sugar because one major component-in this case, Mexico-is out of control, which it was, prices crash. That defeats purpose of having a sugar program, which is to maintain a domestic sugar industry.”
Notably, Berg said, the Mexican government wasn’t opposing the suspension agreements which regulate the flow of sugar into the U.S. The Mexicans argued that the agreements offer “much more stability, predictability” to the system.
Sugar prices largely stabilized following news late last year that the United States and Mexico had agreed on a quota and minimum prices for imports of the sweetener from Mexico.
The Sweetener Users Association, which represents candy companies and other sugar buyers, criticized the verdict, saying ITC “missed a key opportunity” and vowed to step up efforts to reform the U.S. sugar program.
The decision can be appealed to the Court of International Trade or to a binational panel review, according to U.S. government regulations.
Forum News Service reporter Mikkel Pates contributed to this report.