WASHINGTON (DTN) -- The Commerce Department's announcement of details of an "agreement in principle" to settle the U.S.-Mexican sugar dispute on Tuesday drew a mixed reaction from U.S. agriculture and sweetener industry groups. U.S. beet growers were less satisfied with the deal than U.S. cane refiners and cane growers, while a sweetener user-dominated group called it a "bad deal" and corn growers praised it.
Commerce Secretary Wilbur Ross acknowledged Tuesday that the U.S. sugar industry had not accepted the deal, but said he hopes further negotiations over the next few days will result in an agreement the industry can accept.
Agriculture Secretary Sonny Perdue praised the agreement in a statement and in a speech at the Friends of the National Arboretum dinner on Tuesday evening.
In the speech, Perdue said, "the cane refiners and the sugar growers should be smiling today."
In his statement, Perdue said, "This agreement protects American workers and consumers and marks a dramatic improvement for the U.S. sugar industry. The accord sharply reduces the percentage of Mexican refined sugar that may be imported into the United States, and also lowers the polarity dividing line between refined and raw sugar. We also achieved better pricing agreements for the industry. And significantly, the agreement requires that raw Mexican sugar be shipped flowing freely in the holds of ocean-going vessels, rather than being shipped in packages or by land.
"Finally, it is of great importance that USDA will have the flexibility to protect the U.S. sugar industry by making polarity adjustments in the event of extraordinary or unforeseen circumstances."
Perdue also noted that "the agreement prevented potentially significant and retaliatory actions by the Mexican sugar industry, and sets an important tone of good faith leading up to the renegotiation of the North American Free Trade Agreement."
After Ross issued details of the agreement, the American Sugar Alliance, which represents beet and cane growers, announced that it considers the section on Mexico's access to the U.S. market if the United States needs more sugar than the Agriculture Department anticipated "a major loophole."
ASA added it believes Mexico can exploit that provision "to continue to dump subsidized sugar into the U.S. market and short U.S. refineries of raw sugar inputs. This loophole takes away the existing power of the U.S. government to determine the type and polarity of any additional sugar that needs to be imported and cedes that power to the Mexican government."
Phillip Hayes, an ASA spokesman, said, "We will work with Secretary Ross in the coming days to see if that loophole can be effectively closed so that the basic provisions of the agreement are not undermined and USDA can effectively manage the sugar program.
"It is important to note that the U.S. sugar industry has made substantial compromises throughout the negotiations," he continued. "That includes giving Mexico 100% of additional U.S. needs on the condition that the U.S. government retains its authority to regulate additional imports into the U.S. market."
After Perdue issued his statement, Hayes said Perdue's statement on polarity is crucial to the agreement.
"We agree that authority should rest with the USDA and not Mexico to determine the type and polarity of sugar for additional needs," Hayes said. "And we will work with Secretary Perdue, who pledges to use his authority to defend U.S. sugar producers against dumped Mexican sugar."
"Our glass is half full, but we trust the [Agriculture] department will make it work," Carolyn Cheney, the Washington lobbyist for the Sugar Cane Growers Cooperative of Florida, told DTN on the sidelines of the Friends of the National Arboretum dinner on Tuesday evening.
But statements by North Dakota Sens. John Hoeven, a Republican, and Heidi Heitkamp, a Democrat, signaled that Midwest beet growers are still worried that the additional U.S. needs section amounts to a loophole.
"We appreciate the efforts of the U.S. Department of Commerce and their commitment to continue working with the U.S. sugar industry as this agreement is drafted and finalized," said Hoeven. "I have repeatedly pressed Commerce Secretary Ross to stop the dumping of Mexican sugar into U.S. markets, which has harmful impacts on sugar growers in North Dakota. We will continue to work with Secretary Ross, as well as USDA Secretary Sonny Perdue, to close loopholes and ensure that our growers aren't harmed by unfair trade practices."
Heitkamp said in a release that she had spoken with Perdue following the administration's announcement, saying that she continues to have concerns Mexico could exploit loopholes in the deal to continue dumping.
"Mexican dumping hurts sugar growers across North Dakota, and I've long fought for a solution that protects our producers. As I reinforced to Secretary Perdue today, the administration needs to hold Mexico accountable if it continues dumping," said Heitkamp.
"Today's agreement is a good step, but I'm concerned about provisions Mexico could exploit to violate the agreement -- again threatening the good-paying jobs our domestic sugar growers create in the Red River Valley," she continued. "Secretary Perdue assured me he would pursue enforcement if Mexico violates the agreement, and as this agreement is implemented I'll work with North Dakota sugar growers to hold him to his word."
Heitkamp said she was specifically concerned that a provision in the additional needs section "would eliminate the U.S.'s power to determine the type and polarity of any additional sugar that needs to be imported, instead ceding that power to Mexico."
The Coalition for Sugar Reform, a group dominated by industrial sweetener users, called the announcement "a bad deal for hardworking Americans, and said it exemplifies the worst form of crony capitalism. The agreement in principle does not address the fact that the price of sugar in this country is already 80% higher than the world price. In fact, it will result in higher prices, costing U.S. consumers an estimated $1 billion a year. What the agreement does do is solidify that it's time for Congress to shoulder the responsibility of fixing this broken program in the 2018 farm bill, if not before."
The coalition concluded, "U.S. sugar policy should empower America's food and beverage companies to create more jobs, not put hundreds of thousands of good-paying U.S. jobs at risk just to benefit one small interest group."
The coalition also maintained that "until the U.S. sugar industry filed anti-dumping and countervailing duty cases in February 2014, there was free trade in sugar between the United States and Mexico since early 2008." That view ignores the fact that U.S. government agencies found that the Mexican shipments had violated U.S. trade law because the sugar was subsidized and exported at dumped prices.
Meanwhile, the National Corn Growers Association followed the Corn Refiners Association in praising the agreement for avoiding a trade war that might have resulted in reduced Mexican imports of high-fructose corn syrup.
"Mexico is the No. 1 corn export market for U.S. farmers -- including for more than $500 million in annual corn sweetener sales," the corn growers said. "We commend Secretary Ross and the administration for reaching a new sugar suspension agreement. The effective and timely resolution of this dispute minimizes the possible impact on corn and corn products at a critical time for our industry and our farmers.
"Through the North American Free Trade Agreement (NAFTA), U.S. corn farmers have built strong market partnerships with our Mexican customers," the NCGA added. "Maintaining a framework for dispute resolution -- a framework that ensures the ability to work through challenging issues like this -- is an important priority for NCGA as the administration works to modernize the NAFTA agreement."
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