FARGO, N.D. - They say they have no alternative.
U.S. sugar producers - suffering from plummeting sugar prices - on March 28 filed an antidumping and countervailing duty petition with the U.S. International Trade Commission and U.S. Commerce Department.
The petition alleges two things: the Mexican sugar industry has dumped sugar into the U.S. at margins of 45 percent or more; and that Mexican federal and state governments have made substantial subsidies to create those cheaper prices for producers.
The American Sugar Coalition filed the petition, representing the American Sugarbeet Growers Association, American Sugar Cane League, American Sugar Refining Inc., Florida Sugar Cane League, Hawaiian Commercial & Sugar Co., Rio Grande Valley Sugar Growers Inc., Cane Growers Cooperative of Florida, and the United States Beet Sugar Association.
Essentially, the coalition consists of members of the American Sugar Alliance, a trade group. Philip Hayes, a spokesperson for the ASA, says American producers are more efficient than Mexico’s sugar industry, but can’t compete with the Mexican subsidies.
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Hayes says the Mexicans have been dumping sugar into the U.S. at prices 45 percent cheaper than they would receive in Mexico, which is a “big no-no” under U.S. anti-dumping laws. He says Mexico has been paying artificially inflated rates for Mexican cane sugar, and has given producers preferential loans, debt forgiveness and restructuring.
Initiating a case, investigation
The Commerce Department could decide to initiate a case within 20 days, Hayes tells Agweek. If it does, the ITC would determine in 45 days whether there is a “reasonable indication” that dumping or subsidies have occurred and have caused harm to the U.S. industry. If so, the ITC would launch a full investigation that could take a year or more. If that comes out as the U.S. petitioners hope, Hayes says, ITC could impose countervailing duties.
In fact, it could impose interim duties as early as August 2014, which could affect 2014 crop sugar that’s not already sold, and at least would affect the 2015 sugar beet crop.
The coalition says the Mexican actions will cost U.S. sugar producers nearly $1 billion n the 2013 to ’14 crop year. American Crystal Sugar Co., Moorhead, Minn., Minn-Dak Farmers Cooperative, Wahpeton, N.D., and Southern Minnesota Beet Sugar Co., Renville, are all part of the ASGA.
The North American Free Trade Agreement “gives Mexico the right to export sugar to the United States on a tariff-free and quota-free basis - but that does not give the Mexican industry the right to export its surplus to the U.S. market at dumped prices, nor does it permit the (Mexican government) to subsidize its sugar industry without regard to the impact of those subsidies on U.S. petitioners,” the petition reads.
The Mexican government owns and operates 20 percent of the industry. It has rapidly increased exports in recent years from 9 percent of the U.S. market in 2011 and 2012 to 18 percent in 2012 and 2013. The plummeting prices have caused forfeitures of sugar to the U.S. government, costing taxpayers.
“It’s not like this has snuck up on anyone,” Hayes says. “What you’ve seen is a pattern of Mexico dumping sugar into the U.S. market, a pattern of Mexico increasing its supplies and increasing its import into the U.S. for years. The U.S. industry has worked with the Mexican industry to urge our collective governments to ensure the market doesn’t implode. We felt this (legal action) is an act of last resort.”
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