WASHINGTON, D.C. — The U.S. International Trade Commission made a preliminary ruling May 9 that unfair trade practices by the Mexican sugar industry have hurt U.S. sugar producers and American taxpayers who support the nation’s sugar program.
The ITC’s decision follows the U.S. Department of Commerce’s April 18 approval to investigate Mexico’s alleged dumping of subsidized sugar on the American market.
The Department of Commerce will now fast-track its investigation and could make a preliminary ruling by August, when it might also set temporary tariffs on Mexican sugar. Those tariffs would be based on the department’s estimates of how much Mexican sugar has benefited from “unfair trade practices.” There are currently no tariffs or quotas on Mexican sugar imports, though long-standing protections prevent foreign producers from selling commodities in the U.S. below fair value, and countervailing duties protect against the sale of subsidized commodities in the U.S.
Phillip Hayes, a spokesman for the American Sugar Alliance, said the Mexican government owns and operates 20 percent of its sugar industry, and Mexican producers are selling sugar in the U.S. 45 percent below the fair price in Mexico. U.S. sugar producers contend Mexico, which increased sugar shipments to the U.S. by 1 million tons this year, will cost their industry $1 billion this year. Taxpayers also paid $278 million in Fiscal Year 2013 to purchase and divert excess sugar under a federal program that previously operated at no cost, Hayes said.
“This was a big hurdle,” Hayes said. “There is obvious merit to these cases. The easiest time to dismiss something like this would have been at these first two hurdles.”
Hayes expects final rulings will come in 2015, with the possible enactment of a five-year sugar duty, followed by a sunset review.
Sweetened product manufacturers represented by the Sweetener Users Association call the petition a “diversionary tactic” and blame low sugar prices instead on the U.S. sugar program, which they argue kept U.S. sugar prices well above world market levels from 2009-2012.
“A surplus of sugar resulted, leading to a return to historical pricing levels that U.S. and Mexican sugar producers are experiencing in the United States today,” association spokeswoman Jennifer Cummings said in a press release.
Cummings predicts the sugar producers will lose their case and said as the investigation proceeds her organization will continue presenting evidence to prove it lacks merit.
Hayes defends U.S. sugar policy as the nation’s least expensive commodity support program.