Mexico and the United States appear to have averted a trade crisis over sugar by reaching an agreement that on one hand avoids punishing tariffs but on the other reduces the quota of refined sugar that Mexico can export.
However, U.S. sugar producers are not happy with the deal.
Finance Secretary Ildefonso Guajardo Villarreal told a joint press conference in Washington, D.C., yesterday that the agreement will enable Mexico to avoid tariffs of up to 43.9%.
In return, Mexico must reduce the amount of refined sugar it exports to 30% from 53% of the total quota. Unrefined sugar exports will therefore rise from 47% to 70%.
The agreement also raises the price of raw Mexican sugar to 23 cents US per pound from 22.25 cents and for refined sugar from 26 to 28 cents.
U.S. Commerce Secretary Wilbur Ross told the press conference that he hopes U.S. producers will “come on board” given what he sees as an improved agreement.
“The Mexican side has agreed to nearly every request by the U.S. industry to address flaws in the current system and to ensure fair treatment of American sugar growers.”
But the American Sugar Alliance said there is a loophole that Mexico could exploit to “keep dumping subsidized sugar” into the U.S.
Ross said the agreement must still go through the drafting process, during which it is hoped that progress can be made with producers so they are prepared to accept it.
The dispute has worried other U.S. agricultural producers concerned about corn, beef and other exports to Mexico should the latter decide to impose retaliatory tariffs, something for which the Mexican sugar industry had already been pressing with regard to corn syrup.
The sugar negotiations have been seen as a prelude to the upcoming renegotiation of the North American Free Trade Agreement (NAFTA).