US, Mexico reach agreement in sugar dispute

US, Mexico reach agreement in sugar dispute

Washington (AFP) - The United States and Mexico reached an agreement Tuesday in a long-standing dispute that will allow duty-free sugar imports to resume from south of the border, albeit with new conditions.

US Commerce Secretary Wilbur Ross said the new deal will "address the flaws in the current system" and protect American sugar refiners, confectioners and soft drink makers from harm caused by imports of subsidized Mexican sugar.

However, he said the US sugar industry does not support the deal reached in talks with Mexico Economy Minister Ildefonso Guajardo Villarreal.

"The new agreement prevents dumping of Mexican sugar and corrects for subsidies the Mexican sugar industry received," Ross said at a joint press conference.

The deal will increase the import price to 23 cents a pound of raw sugar from 22.25 cents, and for refined sugar to 28 cents a pound from 26 cents.

In addition, the share of refined sugar imported will be reduced to 30 percent from 53 percent.

Guajardo said those changes "protects Mexican companies and workers" and "maintains Mexico's position as the main supplier" to the US market.

In addition, Mexico was granted "right of first refusal" to supply any excess US demand, as determined each year by the US Department of Agriculture.

Ross said he hopes the sugar industry will support the deal once it is finalized in the coming days. He did not specify what objections the refiners raised.

US sugar producers have protested the amount of cheap sugar pouring across the border, accusing Mexico of subsidizing its sugar industry, then dumping the excess product.

Last year, Mexico exported 1.1 million tonnes of sugar to the United States, some 40 percent of which was refined.

Mexican sugar has entered the US market tariff-free since 2008. In exchange, the Mexican market was opened to US corn-based fructose, used mainly to sweeten soft drinks.

After protests from US sugar companies and farmers, both governments agreed to Mexican sugar export quotas in 2014. But complaints from US sugar refiners continued, and Washington and Mexico City reopened talks last year.

Washington had threatened to slap tariffs of up to 80 percent on Mexican sugar unless a deal was reached.

The dispute comes as the two neighbors, along with Canada, are set to renegotiate the North American Free Trade Agreement (NAFTA).