WASHINGTON—America’s sugar producers today asked the United States government to take corrective action against Mexico’s sugar industry for dumping subsidized sugar onto the U.S. market and inflicting harm on U.S. growers and taxpayers.
The antidumping and countervailing duty petitions filed with the U.S. International Trade Commission and U.S. Department of Commerce allege that the Mexican industry has shipped sugar to the United States at dumping margins of 45 percent or more and has received substantial subsidies from Mexican federal and state governments.
All told, these actions will cost U.S. sugar producers nearly $1 billion in net income for the 2013/2014 crop year, according to the filings.
The North American Free Trade Agreement (NAFTA) “gives Mexico the right to export sugar to the United States on a tariff-free and quota-free basis—but that does not give the Mexican industry the right to export its surplus to the U.S. market at dumped prices, nor does it permit the [Mexican government] to subsidize its sugar industry without regard to the impact of those subsidies on U.S. producers,” the petitions read.
The Mexican sugar industry—20 percent of which is owned and operated by the Mexican government—has rapidly increased exports to the United States in recent years, rising from 9 percent of the U.S. market in 2011/2012 to nearly18 percent in 2012/2013. Over that same period, Mexico’s historic surpluses have sent U.S. sugar prices to unsustainable low levels.
U.S. prices have been cut in half since late 2011 and are now trading at the same lows of the 1980s. U.S. sugar policy also incurred a taxpayer cost in 2013, after running at no cost for the past 10 years, as the U.S. Department of Agriculture (USDA) sought to steady a market awash in subsidized and dumped Mexican imports.
“Secretary Vilsack and his team at the USDA should be commended for their extraordinary actions on behalf of America’s sugar farmers,” said Phillip Hayes, a spokesperson for the American Sugar Alliance. “Unfortunately, the unrelenting flood of dumped and subsidized sugar from Mexico has overwhelmed the U.S. market and USDA’s efforts, and we’ve been left with no alternative but to file these cases.”
Hayes noted that this is now a legal dispute and that the facts are straightforward.
“The Mexican sugar industry exported dumped and subsidized sugar to the United States, and as a result, it caused tremendous harm to a domestic industry that supports 142,000 jobs,” he said. “U.S. trade laws are designed to stop such injury.”
For approximately 100 years, the United States has maintained antidumping and countervailing duty laws to ensure predatory trade practices don’t drive domestic industries out of business.
If U.S. producers are harmed, these laws permit duties to be imposed on the imported products that benefit from subsidies or are sold below fair market prices—that is, sold at a price that is lower than the foreign producer’s cost of production or the price they charge in their home market.
“We are more efficient than Mexico’s sugar industry and can compete with anyone in a free market,” Hayes added, “but it is hard for U.S. farmers to succeed when a subsidized industry that is largely government-controlled is dumping its product.”
NAFTA explicitly permits the filing of antidumping and countervailing duty cases, and NAFTA countries have filed 114 antidumping and countervailing duty cases against each other since the trade deal went into effect. Of these 114 cases, Mexico has filed 31 cases against the United States, and the United States has filed 30 cases against Mexico, not counting the pending sugar petitions.
The sugar producers’ petitions were officially filed by the American Sugar Coalition, which includes: American Sugarbeet Growers Association; American Sugar Cane League; American Sugar Refining, Inc.; Florida Sugar Cane League; Hawaiian Commercial & Sugar Company; Rio Grande Valley Sugar Growers, Inc.; Sugar Cane Growers Cooperative of Florida; and United States Beet Sugar Association.