US sugar producers prevail in Mexican dumping, subsidization suit

(Farm & Ranch Guide) – U.S. sugar producers have essentially won the Mexico sugar dumping lawsuit.

The U.S. Department of Commerce (DOC) signed agreements with Mexico last month that ended the investigation into Mexico dumping subsidized sugar on the U.S. market, according to Phillip Hayes, a spokesman for the American Sugar Alliance.

“Sugar producers and taxpayers were being injured by Mexico dumping subsidized sugar onto the U.S. market,” Hayes said. “Our goal was to stop that injury and promote a free and fair market, and the suspension agreements finalized by the U.S. and Mexican governments will do that.”

A preliminary DOC ruling in May 2014 determined there was evidence that Mexico’s sugar dumping and subsidization was injuring U.S. interests, according to the DOC’s International Trade Administration.

There were penalties that Mexico had to abide with, that ended when the new agreements were signed in December 2014.

U.S. sugar producers are “pleased” with the new agreements made with Mexico that will keep that country from dumping sugar on the U.S. market and keeping prices as low as they were in the 1980s, Hayes said.

After running at no cost for 10 years, the U.S. Department of Agriculture had to keep the sugar market from completely collapsing by using taxpayer funds to buy up surplus sugar to keep prices level, Hayes explained.

U.S. sugar producers applauded U.S. officials for working so hard during the long negotiations.

U.S. sugarbeet producers were losing the most money during the dumping, according to Hayes, because while sugar prices dropped substantially, sugarbeet producers had to continue to pay for expensive inputs to produce beets, and also had to pay to keep their membership in their local sugarbeet cooperative.

Meanwhile, the Mexican government owned one-fifth of Mexico’s sugar, and, in addition, gave Mexican sugar producers export subsidies, preferential government loans coupled with debt forgiveness, government cash infusions to cover operating shortfalls and more, Hayes said.

The new agreements signed with Mexico suspends further investigations of Mexico sugar dumping and subsidization as long as Mexico abides by the terms of the agreement, according to the DOC’s International Trade Administration.

Some of the key agreements with Mexico include:

– The DOC will calculate an export limit for Mexico based on information it obtains from the USDA concerning the U.S. needs for sugar in any given year. Imports will be prevented from being concentrated during certain times of the year, and there will be a limit on the amount of refined sugar that may enter the U.S.

– The Mexican government will allocate the amount of sugar that each Mexican sugar producer/exporter can export to the U.S. As part of this process, the Mexican government will establish an export licensing mechanism, and sugar from Mexico cannot enter the U.S. if it is not accompanied by an export license.

– The agreement establishes minimum prices to guard against undercutting or suppression of U.S. prices. These minimum prices are 26 cents per pound by dry weight commercial value for refined sugar and $0.2225 per pound by dry weight commercial value for all other sugar.

The agreements do not undermine NAFTA and do not require any changes to U.S. sugar policy in the recently passed Farm Bill, the DOC reported.

“U.S. producers are pleased by the agreements,” Hayes said. “Finally, U.S. sugar producers are receiving some justice from Mexico dumping subsidized sugar on the U.S. sugar market.”