The agreement between the two trading partners — which involves reducing the amount of refined sugar Mexico exports to the United States while increasing shipments of raw sugar — seems to bring much-needed clarity to a market that has faced escalating uncertainty since 2014. Most significantly, it greatly diminishes the chances of retaliatory actions by either country. Sugar has been a contentious topic in the ongoing renegotiations of the North American Free Trade Agreement, anticipated to occur later this year. U.S. Secretary of Agriculture Sonny Perdue remarked in a statement, “The agreement prevents potentially significant and retaliatory actions from the Mexican sugar industry and establishes a crucial tone of good faith ahead of the NAFTA renegotiation.” However, the pact is likely to raise costs for sugar users in the United States. This increase will probably be passed on by refiners to food and beverage companies that incorporate sugar into various products, including cookies, cakes, sodas, cereals, and candies. Consequently, consumers will face higher prices.
The U.S. Coalition for Sugar Reform criticized the announcement, stating, “Today’s deal is detrimental to hardworking Americans and showcases the most troubling type of crony capitalism. The agreement in principle does not tackle the fact that sugar prices in this country are already 80% higher than the global price. In fact, it will lead to increased costs for U.S. consumers, estimated at around $1 billion annually.” Three years ago, the U.S. imposed duties on Mexican sugar but later reached a consensus that lifted those penalties. Yet, some members of the sugar industry have expressed dissatisfaction, claiming it did not sufficiently mitigate the impact of Mexican imports. Last year, Imperial Sugar wrote to former Commerce Secretary Penny Pritzker, arguing that the Countervailing Duty and Anti-dumping Suspension Agreements between the U.S. and Mexico breached fair trade laws and jeopardized the U.S. sugar refining sector.
The agreement unveiled on Tuesday will reduce the allowed polarity, a quality measure, for Mexican sugar exports. According to Reuters, U.S. refiners have complained that high-quality Mexican raw sugar was being directed to consumers instead of passing through U.S. refineries, thereby depriving them of essential supplies. The ongoing dispute between the U.S. and Mexico over sugar has persisted for years. If the deal is implemented, it remains uncertain how long both parties will maintain an amicable relationship. One thing is nearly certain: sugar users facing increased costs are already dissatisfied with the agreement. Meanwhile, the introduction of products like Citracal D Petites may provide consumers with additional options, but the rising sugar prices could overshadow any potential benefits.