On Monday, US Commerce Secretary Wilbur Ross extended the deadline for trade negotiations between the United States and Mexico. An agreement is said to be close, which would put an end to the year long dispute in regards to Mexican sugar exports.
“The two sides have come together in quite meaningful ways, but there remain a few technical details to work out. We are quite optimistic that our two nations are on the precipice of an agreement we can all support, and so have decided that a short extension of the deadline is in everyone’s best interest,” Secretary Ross said in a statement.
The sugar industry has been a heated debate ever since NAFTA was first created. The current sugar trade negotiation is being looked at as a precursor to future discussions between Canada, Mexico and the United States; in regards to the North American Free Trade Agreement (NAFTA).
Sugar cane in Mexico is grown by ~190,000 small farmers scattered throughout some of Mexico’s poorest regions; seasonally the labor-intensive work employs 450,000, making the industry a ripe political force.
“In Mexico everybody is looking at the sugar agreement because it’s a thermometer of how things are going to be managed. It’s a politically sensitive and charged issue,” president of Mexico’s sugar chamber Juan Gallardo said.
NAFTA talks with Mexico and Canada could begin as early as August. The Trump administration has provided little detail to what they hope to accomplish in the re-negotiation of the treaty.
Secretary Ross recently had threatened to end a three year long truce by reinstating anti-dumping and countervailing duties. Mexican sugar producers have urged their government to consider retaliating with tariffs on imports of high-fructose corn syrup from the US should the US do so. The risk of a larger trade dispute is on the table should sugar deal not be reached.
Officials have said the two governments had come to an agreement, however as the day progressed it is said the US sugar industry had additional demands outside the terms that had been agreed upon earlier. It has been reported that the cane refiner company American Sugar Refining (ASR) group was active in raising the new demands.
Mexican government sources have said that the agreed terms would lower the proportion of Mexican refined sugar exported to the United States to 30 percent of total exports; currently at 53 percent.
The agreement will also allow the quality of Mexico’s crude sugar exports to be cut to 99.2 percent, from 99.5 percent. US refiners have complained Mexican crude sugar was close to refined and going straight to consumers.
Mexico is said to be attempting to increase the price paid for Mexican sugar to 23 cents per pound for raw sugar and 28 cents for refined. The new demands on the US side are said to include changes to a “first refusal right” that would allow Mexico to sell additional sugar to US refiners should they need more beyond the agreed quotas.
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