U.S.-Mexico trade tensions intensify despite sugar deal

By Commodities FOXBusiness

(AP)

The Mexican sugar industry pushed for a probe into unfair U.S. trade practices Wednesday, despite leaders of the two countries reaching an agreement on sugar prices Tuesday intended to sidestep a potential trade war over the commodity.

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The Mexican sugar lobby said Wednesday that it still wants its government to order an investigation into whether the United States is dumping high-fructose corn syrup into its market and undercutting domestic producers, having indicated as recently as last month that it has concrete evidence of such activity.

It’s not just the United States’ southern neighbor that is griping over the terms of the deal, as U.S. producers and farmers are not on board either. U.S. Commerce Secretary Wilbur Ross said the deal will prevent Mexico from dumping refined sugar into U.S. markets and weakening U.S. businesses, but domestic producers and farmers have concerns over whether it goes far enough toward preventing that.

“U.S. sugar farmers and producers are concerned that the agreement in principle contains a major loophole in the section dealing with additional U.S. needs," said Phillip Hayes, a spokesman for the American Sugar Alliance, in a statement Tuesday. "Mexico could exploit this loophole to continue to dump subsidized sugar into the U.S. market and short U.S. refineries of raw sugar inputs.” 

Ross told FOX Business Wednesday that U.S. industry concerns were basically “down to … a technical issue” over how surplus sugar would be imported into the United States.

The sugar industry said it has already lost $4 billion thanks to unbalanced trade with Mexico and 142,000 domestic jobs are at risk across 22 states.

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The terms of the deal reached Tuesday include requiring Mexico to change the proportions of raw vs. refined sugar that it exports to the United States, increasing the price at which the commodity must be sold and accepting increased enforcement measures and penalties.

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Sugar has been a big sore spot between the two countries under NAFTA. While the conflict dates back to at least 2008, threats have been flying for months over punitive tariffs and retaliatory measures due to U.S. industry insistence on the renegotiation of a 2014 deal. 

“This has been a very nettlesome, very aggravating factor for quite some little while and we thought it was a very good idea to try to get it out of the way so that we could get on with the much bigger parts of NAFTA that need changing,” Ross told FOX Business Wednesday.

While the sugar deal was thought to clear a key obstacle prior to NAFTA renegotiation discussions later this summer, industry pushback from both sides of the border – if unresolved – could put a dent in those discussions. The sugar deal is still in draft form and Ross said Tuesday he would work with U.S. producers throughout the coming days to address their concerns.

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