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Mexico, US Sign Sugar Trade Agreements

by Mike Godfrey,, Washington

25 December 2014

On December 19, the United States Department of Commerce (Commerce) announced that it has signed agreements to suspend the antidumping duty (AD) and countervailing duty (CVD) investigations on imports of sugar from Mexico.

Commerce had announced, on October 27, 2014, preliminary ADs ranging from 39.54 percent to 47.26 percent on imports of sugar from Mexico, in addition to the preliminary CVDs ranging from 2.99 percent to 17.01 percent, which were determined on August 26, 2014.

Sugar producers based in the US had requested the duties, arguing that "unfair" subsidies on offer in Mexico have allowed Mexican producers to flood the US market with cheap exports. The US sugar industry claims that it has lost USD1bn worth of business as a result.

According to a previous statement from Commerce's International Trade Administration, the signed agreements create mechanisms to ensure that unfairly traded imports of Mexican sugar do not cause injury to US sugar producers.

The CVD agreement contains provisions to ensure there is not an oversupply of Mexican sugar in the US market, which could cause price declines that threaten the US industry and farmers. Specifically, Commerce will calculate an export limit for Mexico set at 100 percent of US needs after accounting for US production and imports from tariff rate quota countries.

The agreement, signed by both Governments, will also prevent imports from being concentrated during certain times of the year, and the Government of Mexico has agreed to establish an export licensing mechanism.

On the other hand, the AD agreement establishes reference prices, or minimum prices, to guard against undercutting or US prices. The signatories of the AD agreement are Commerce and the main Mexican sugar producers and exporters.

In addition, Commerce emphasized that the agreements do not change the US Department of Agriculture's sugar program, or US obligations under the World Trade Organization regarding sugar quotas.

TAGS: tax | business | tariffs | anti-dumping | trade treaty | Mexico | food | agreements | licensing | trade disputes | United States | import duty | trade

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