U.S., Mexico nearing deal on sugar trade: Mexican economy minister

Reuters News
Posted: Jun 05, 2017 3:47 PM

By David Lawder

WASHINGTON (Reuters) - The United States and Mexico are close to announcing a sugar trade deal that will avert steep U.S. duties on Mexican sugar imports and clear a major obstacle from renegotiation of the NAFTA trade agreement, Mexican Economy Minister Ildefonso Guajardo said on Tuesday.

The deal, which was still coming together on Tuesday morning, will reduce the share of refined sugar that Mexico can export to the United States but maintain Mexico's overall access to the U.S. sugar market, Guajardo said on Mexican radio.

Guajardo told CNBC earlier on Tuesday that he and U.S. Commerce Secretary Wilbur Ross would "probably" be announcing an agreement at a news conference scheduled for 1:45 p.m. (1745 GMT) at the U.S. Chamber of Commerce in Washington.

An agreement would help avoid potential retaliation from Mexico on imports of U.S. high-fructose corn syrup, a trade battle that would heighten U.S.-Mexico tensions as both countries along with Canada prepare to begin renegotiating the 23-year-old North American Free Trade Agreement in August.

Negotiators worked overnight on "minor technicalities" to an agreement, Guajardo told CNBC, adding: "You are never over until you are really over."

Ross on Monday extended the deadline for the negotiations by 24 hours to complete what he called "final technical consultations" for a deal.

Sources on both sides of the border said on Monday that the U.S. sugar industry had added new demands outside of the terms agreed on earlier in the day by the two governments.

Guajardo told Mexican radio that the proportion of sugar shipped to the United States would be 30 percent refined and 70 percent raw, down from the 53 percent cap on refined sugar under a 2014 agreement.

Another Mexican official with knowledge of the negotiations told Reuters that the proposed deal also lowered the allowed polarity, a measure of quality, for Mexican sugar exports.

U.S. refiners have complained that high-quality Mexican raw sugar was going straight to sugar consumers, rather than passing through U.S. refineries.

The official said a main point that had been discussed overnight related to Mexico’s "first refusal" rights, which would allow it to export more sugar than defined in the quotas when U.S. import needs increased.

The deal would mark the culmination of a years-long dispute between the countries over sugar, after U.S. groups three years ago asked the government for protection from dumping of subsidized imports from Mexico.

In 2014, the U.S. government slapped large duties on Mexican sugar but hammered out a deal with Mexico that suspended those levies. Factions of the U.S. industry have said that the deal has failed to eliminate harm from Mexican imports.

The U.S. industry involved in the dispute include a coalition of cane and beet farming groups as well as ASR Group, the maker of Domino Sugar that is owned by the politically connected Fanjul family.

ASR and fellow cane refiner Imperial Sugar, owned by commodities firm Louis Dreyfus Company BV [AKIRAU.UL], have said they are being starved of raw supplies under the current deal. They have asked the U.S. government to terminate the pact.

The latest talks began in March, two months after U.S. President Donald Trump took office vowing a tougher line on trade to protect U.S. industry and jobs.

(Additional reporting by Susan Heavey in Washington, Anthony Esposito and Dave Graham in Mexico City and Chris Prentice in New York.; Editing by Chizu Nomiyama and Meredith Mazzilli)