The Hagstrom Report: Court issues stay in Mexico sugar case as users seek changes

The Court of International Trade has issued a stay through Dec. 6 on its decision that a 2017 amended sugar agreement between the United States and Mexico is invalid because the Commerce Department did not release all communication about negotiations in the case.

During this time the Commerce Department is taking comments on the suspension agreements to which the U.S. and Mexican governments agreed.

The U.S. government had found that Mexico had subsidized sugar production and dumped sugar in the United States. The agreements suspended U.S. government actions that would have resulted in high tariffs on Mexican sugar imported into the United States.

The Mexican government and Mexican sugar industry have both asked the U.S. government to reinstate the suspension agreements without change, a stance that U.S. producers support, said Phillip Hayes, a spokesman for the American Sugar Alliance.

Hayes also noted that the court did not rule on the merits of the amendments, only on the Commerce Department’s record-keeping procedures.

But the Sweetener Users Association, which represents U.S. candy companies and other industrial users of sugar, said Friday that it sees the Court of International Trade decision vacating the 2017 sugar amendments as “an opportunity to make improvements that would benefit U.S. food and beverage manufacturers and consumers,” and has filed comments with the Commerce Department asking for changes.

In a news release, the Sweetener Users said “In 2017, when the Department of Commerce negotiated amendments to the sugar suspension agreements with Mexico, SUA strongly opposed the higher reference prices in these amendments — de facto price floors that have increased costs for food companies and consumers ever since.”

“We also opposed several other features of the amendments, including changes to the definition of ‘refined sugar’ that were inconsistent with international standards and existing U.S. tariff laws. There were some parts that we supported, however, such as the requirement that a greater share of imports be available to coastal sugar refineries.

“Now, the Court of International Trade has vacated the 2017 amendments. In these circumstances, Commerce is right to re-initiate the process of amending the original 2014 suspension agreements. Commerce should not simply rubber-stamp the existing amendments, however, and should instead use this opportunity to return reference prices to the lower levels in the 2014 agreement.

“Moreover, the department should revisit the threshold for what is considered refined sugar, examining carefully whether the 2017 provisions may have been detrimental to new entrants in the cane refining industry,” the Sweetener Users said.

“At a time when weather-related shortages have caused some U.S. sugar sellers to declare force majeure and walk away from previous sales commitments, supply adequacy in the United States is threatened, and we need every possible source of refined sugar, including both traditional and non-traditional cane refiners.”