Compromise Surfaces to Settle US-Mexico Sugar Trade Issues

A proposal has surfaced via the ongoing U.S.-Mexico sugar trade suspension talks that would require that Mexico could send only its raw sugar to U.S. refineries if the refinery has at least 25% of its sales from crystalline sugar, per contacts familiar with the negotiations.The talks are in response to issues raised by the U.S. domestic industry regarding shortages of raw sugar for U.S. cane refiners and price suppression in the refined sugar market. The Department of Commerce is engaged in consultations with the Mexican government and sugar industry. The American Sugar Coalition, as well as sugar refiners Imperial Sugar Co. and AmCane Sugar LLC, asked Commerce to review the agreements.The proposal would put CSC Sugar LLC at a disadvantage versus traditional refiners because it does not meet the criteria, Jim Glassman, an adviser to CSC Sugar, told Bloomberg BNA. CSC Sugar LLC refines, produces, trades and distributes caned sugar in North America. The company turns raw sugar into liquid form. Glassman also said Commerce would be "vastly exceeding its authority" if the proposal was adopted since the unfair trade statutes do not provide for such an outcome. Glassman, a former undersecretary of State, said CSC is a small refiner, accounting for 8 percent to 10 percent of the market. But its traditional competitors see it as a major threat, he said.The Mexican Sugar Chamber wrote a December 8 letter accusing cane refiner Imperial Sugar and other U.S. cane refiners of trying to use the negotiations to prevent U.S. companies with new technology from having access to raw sugar because they view them as competitors. "However, U.S. laws do not allow favoring one producer over another through a suspension agreement," the letter stated. Imperial Sugar declined comment on the letter.Commerce is reviewing suspension agreements that suspended dumping and subsidy cases on Mexican sugar imports. The agreements averted duties but imposed price floors and quotas. Commerce, in notices published December 5, said certain transactions were not in compliance with the agreements. Commerce also said it would seek additional information from Mexico and Mexican sugar producers and make a preliminary ruling within 120 days.