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ITC rules American producers unfairly hurt by Mexican competition

The U.S. sugar industry’s campaign against what it says is unfair Mexican competition won a victory May 9.

A preliminary ruling by the U.S. International Trade Commission, on a 5-0 vote, found that U.S. sugar growers have been hurt by subsidized sugar imports from Mexico. The decision clears the way for further investigation.

“There is a reasonable indication that a U.S. industry is materially injured by reason of imports of sugar from Mexico that are allegedly subsidized and sold in the United States at less than fair value,” according to an ITC news release.

The ITC report will be available after June 9, according to the ITC website.

Now, the U.S. Department of Commerce will continue to investigate Mexican sugar imports, with a preliminary countervailing duty determination due on or about June 24 and its antidumping duty determination due on or about Sept. 4, according to ITC.

Final rulings from the ITC and Commerce Department might not come until early 2015.

If U.S. authorities do conclude that Mexican sugar has enjoyed an unfair advantage, new duties, or taxes, would be imposed on Mexican sugar exported into the U.S.

Doing so would ensure that Mexican and U.S. sugar producers are “playing on a level field,” says Phillip Hayes, a spokesman for the Washington, D.C.-based American Sugar Alliance.

The duty, if installed, would be in place for five years, he says.

The U.S. Sugar Alliance, whose members include beet and cane growers, filed antidumping and countervailing duty petitions with the ITC in March.

“We’re very pleased with today’s ruling. We have a very strong case here, and the U.S. government apparently agrees with us,” Hayes said May 9, describing the ruling as “a big step.”

David Berg, president of American Crystal Sugar Co., a Moorhead, Minn.-based sugar beet cooperative, says he’s not able to discuss the ruling.

He says his company will not issue a statement on the ruling, relying instead on statements from the American Sugar Alliance.

But on May 7, Berg told editors of the Grand Forks (N.D.) Herald that he was optimistic the U.S. sugar industry had made a strong case to the ITC.

Sen. Heidi Heitkamp, D.-N.D., also praised the ITC decision.

“We know that our hardworking sugar producers can compete with anyone, as long as there is an even playing field. The ITC made the right decision today to move forward with this investigation,” she said.

The ITC decision drew reaction from elsewhere in the country, including from Rep. Bill Cassidy, R-La.

“As the second largest producer of sugarcane in the U.S., it’s very important to Louisiana that the International Trade Commission investigate Mexico’s illegal dumping of sugar into the U.S. market, and I am glad they are doing so now,” Cassidy says.

Second ruling

The May 9 ruling was the second victory this spring for the U.S. sugar industry.

On April 18, the U.S. Department of Commerce said it will investigate Mexico’s sugar industry. The two rulings show the federal government believes the U.S. sugar industry has legitimate grievances, Hayes says.

U.S. sugar growers, in their petition, claim Mexico’s actions are costing their industry $1 billion this year.

The North American Free Trade Agreement allows Mexico to export unlimited amounts of sugar to the U.S., but only if that sugar isn’t subsidized or dumped. Dumping, in international trade, means selling a product in foreign markets for less than in the home market.

The petition filed by U.S. sugar growers notes the U.S. government has spent $278 million in fiscal year 2013 to keep the U.S. sugar market from collapsing under the wave of subsidized Mexican imports.

Further, the U.S. Congressional Budget Office says lower sugar prices could lead the government to spend $390 million in fiscal years 2015 to 2024 because sugar prices might be low.

US sugar prices

U.S. sugar prices have plunged in the past year, reflecting record world production and growing Mexican imports.

The Mexican sugar industry has increased its U.S. market share from 9 percent in fiscal year 2012 to about 18 percent in fiscal year 2013, according to the U.S. Sugar Alliance.

The Mexican government owns and operates about 20 percent of the country’s sugar industry.

U.S. sugar prices have risen recently, however.

The May price of wholesale refined sugar, the price of most interest to the Upper Midwest sugar beet industry, was 29.75 cents per pound. The April price was 26.5 cents per pound.

Some of that increase could reflect expectations that less Mexican sugar eventually will enter the U.S., Hayes says.

But reduced U.S. sugar beet acreage also factors into the higher sugar prices, he says.

So do production problems in key sugar-producing countries, Australia and drought in Brazil, he says.