MEXICO CITY/NEW YORK, Dec 19: Mexico and the United States finalized a pact on Friday to end a months-long sugar dispute that threatened to escalate into a broader trade battle.
The two countries have settled on agreements that will avoid hefty duties on imports of sugar from Mexico, the U.S. Department of Commerce said in a statement.
U.S. imports of Mexican sugar have dried up since Commerce decided in August and October to levy anti-dumping and anti-subsidy duties and started collecting cash deposits from importers.
In a deal hammered out after days of negotiations in Washington this week, Mexico and the United States revised a draft agreement to suspend those duties, which was circulated in late October. The draft deal was criticized by many in the industry, including refiners who said it would crimp supplies and threaten their survival.
The finalized agreement raises the reference prices for both refined and raw sugar. The price floor for refined sugar is set at $0.26 a pound, up from the $0.2357/lb set in the draft pact. The minimum price for all other sugar is set at $0.2225/lb, up from $0.2075 in the draft.
A provision allowing Mexico to meet 100 per cent of remaining U.S. demand after U.S. producers and other countries with fixed quotas have exhausted their supply was confirmed.
Refined sugar can make up a maximum of 53 per cent of the total exported, down from 60 per cent in the draft deal.
The two countries have been at odds over sweetener imports since late March, when a group of petitioners, largely groups representing U.S. sugar growers, asked the U.S. government to investigate the dumping of cheap, subsidized sugar from Mexico.
Mexico has had unfettered access to the coveted U.S. sugar market since 2008 through the North American Free Trade Agreement. The U.S. market is otherwise highly protected through a complicated network of import quotas and market allotments.
"These agreements, which work in concert with the U.S. sugar program, contain important mechanisms that both address the market-distorting effects of unfairly traded sugar and help promote stability in this important market," said Assistant Secretary of Commerce for Enforcement and Compliance Paul Piquado, who signed the suspension agreements on behalf of the United States. ?Reuters