Trade Issues Have Potential Mixed Impact on Sugar

February 28th, 2017


Category: Sugar

Sugar-Sacks450x299(Food Business News) –  While the U.S. withdrawal from the Trans-Pacific Partnership “doesn’t mean much for sweeteners,” the impact could be significant if the North American Free Trade Agreement is cancelled or rewritten, said Ambassador Darci Vetter, former chief agricultural negotiator for the U.S. Trade Representative.

Ms. Vetter, the opening speaker at the International Sweetener Colloquium in Dana Point on Feb. 27 and a key U.S. negotiator in the T.P.P., noted that the T.P.P. would have added a “relatively small” 85,000 tonnes of sugar imports mainly from Australia. Those additional imports likely would have been offset by a like reduction in imports from Mexico, trade sources said.

But the impact on the rest of agriculture, as well as other key trade issues in the T.P.P., may be significant, especially if China (which was not one of the 12 countries in the T.P.P.) assumes a greater role going forward, Ms. Vetter said. One of the goals of the T.P.P. was to eventually “bring China into the (T.P.P.) fold,” but only after China was forced to “change its behavior” because of the T.P.P., she said.

Ms. Vetter said the original 12 countries in the T.P.P. shared the important “unwritten rule” of similar ambition. The T.P.P. may continue to exist, she said, just without the United States.

Concerning NAFTA, Ms. Vetter said there appears to be four options: withdrawal, renegotiation, modernizing or tweaking.

“Withdrawal would be harmful and difficult,” Ms. Vetter said. “The administration has full latitude to withdraw, but it would not be a quick.”

Renegotiation suggests “fundamental tenants will be on the table,” Ms. Vetter said. “If we want to move backwards on tariffs, I would expect Mexico to do the same.” That may be significant for agriculture, including sweeteners, she said, noting that Mexico already was preparing to diversify its ag sector by looking at countries to the south. If the United States chooses to withdraw from NAFTA before having an alternative plan, there may not be time before others react, she said.

Ms. Vetter said there were some “pretty good reasons” to modernize the pact because it was 20 years old.

“Will NAFTA be the right vehicle once the problem is defined?” she asked.

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