Sugar deal not so sweet
WASHINGTON–The tentative sugar deal that the US and Mexico announced last week centering on Mexican sugar exports hasn’t stopped the pressure from lawmakers and Sugar groups to change Tuesday’s agreement.
One senator told Commerce Secretary Wilbur Ross at the Senate Appropriations committee Thursday afternoon that the deal will drive up sugar prices causing a spike in food prices.
“I would hope as you work to finalize the agreement that you’ll take into consideration not only the interests of the sugar producers, but also the interests of consumers and businesses that are going to be affected,” Senator Jeanne Shaheen of New Hampshire told Ross, who testified before a Senate Appropriations subcommittee.
When Ross and Mexican Minister of Economy Ildefonso Guajardo Villarreal announced the deal, they said there were unresolved issues. Ross said he thought it would be a matter of days before the deal to put tighter restrictions on Mexican sugar imports was finalized. The country had been accused of selling its sugar into U.S. markets at below the cost of production, a practice called “dumping."
The U.S. sugar industry, a driving force behind the Commerce Department’s efforts to renegotiate the U.S.-Mexico sugar arrangement under what’s called a suspension agreement, is also unhappy with the preliminary deal, and so are lawmakers from sugar-producing states.
Under the preliminary suspension agreement, 70 percent of the sugar Mexico ships to the U.S. would be raw and have a purity level of 99.2 percent or less. That’s good for U.S. refiners who depend on a sufficient supply of raw product to run through their mills. The current deal between the two countries requires that just 53 percent of Mexican sugar be raw and have a purity level of 99.5 percent or less.
But the refiners are still urging Commerce to change the deal. That's because negotiators agreed that if the USDA decides there is not enough sugar on the U.S. market and allows in above-quota imports from Mexico, the new restrictions would not be mandatory for that sugar.
The American Sugar Alliance has called this “a loophole” that threatens to allow Mexico to sell too much refined product into the US market.