The US sugar industry was vindicated following the unanimous verdict (6 to 0 vote) on 20th October by the US International Trade Commission (ITC) stating that Mexico’s sugar industry harmed American producers by dumping subsidized sugar onto the US market.
The decision puts an end to the 18-month trade war that was broadly expected and likely to be seen as a win for the powerful U. sugar lobby.
The ITC and U.S. Department of Commerce (DOC) launched antidumping and countervailing duty investigations into Mexico’s sugar industry shortly after the cases were brought.
The DOC inquiry concluded on Sept. 16 and found that Mexico’s sugar industry had benefitted from subsidy rates up to 44 percent and had shipped sugar to the United States at dumping margins of more than 42 percent.
No duties will be applied to imports from Mexico, after the two countries penned a deal late last year that suspended the tariffs and established minimum prices and quotas for imports.
“The decision does not affect the validity and terms of the suspension agreements. We don’t agree with this decision, but it’s not a surprise,” a senior Mexican government official said.
The coveted 11-million-tonne US market, which is protected through a complex network of import restrictions, saw volatility ahead of and during the U.S. government anti-dumping probe.
A coalition of U.S. producers, which had petitioned their government for protection against surging levels of low-priced imports, applauded the verdict.
The ITC decision addresses “unfair trade practices that were injuring American farmers, workers, and taxpayers,” said Phillip Hayes, a spokesman for the American Sugar Alliance.
The final decision would bring a measure of certainty in the market, said traders.
“People know now what the rules are,” said Frank Jenkins, a veteran U.S. trader and president at JSG Commodities in Norwalk, Connecticut.
Sugar prices largely stabilized following news late last year that the United States and Mexico had agreed on a quota and minimum prices for imports of the sweetener from Mexico.
The second-month U.S. domestic raw sugar contract on ICE Futures U.S. was up 0.8 percent at 25.20 cents/lb at 1:51 p.m. EDT (1751 GMT) on 20th October.
The Sweetener Users Association, which represents candy companies and other sugar buyers, criticized the verdict, saying ITC “missed a key opportunity” and vowed to step up efforts to reform the U.S. sugar program.
The decision can be appealed to the Court of International Trade or to a bi-national panel review, according to U.S. government regulations.