The agreement between the two trading partners aims to reduce the amount of refined sugar Mexico exports to the United States while increasing shipments of raw sugar. This arrangement seems to clarify a market that has faced significant uncertainty since 2014. Most importantly, it greatly diminishes the chances of one country retaliating against the other. Sugar has been a contentious issue in the renegotiation of the North American Free Trade Agreement, which is expected to happen later this year. “The pact has averted potentially serious retaliatory measures from the Mexican sugar industry and establishes an important tone of goodwill as we approach the renegotiation of the North American Free Trade Agreement,” stated U.S. Secretary of Agriculture Sonny Perdue.
However, this agreement is anticipated to raise costs for sugar users in the United States. These increased costs are likely to be passed on by refiners to food and beverage companies that incorporate sugar in various products such as cookies, cakes, sodas, cereals, and candy. As a result, consumers will face higher prices. “Today’s announcement is detrimental to hardworking Americans and represents a severe case of crony capitalism,” the U.S. Coalition for Sugar Reform declared in a statement. They further noted that the principle agreement does not tackle the already inflated sugar prices in the U.S., which stand approximately 80% higher than global rates. In fact, it could lead to an additional cost burden of around $1 billion per year for U.S. consumers.
Three years ago, the U.S. imposed duties on Mexican sugar but later reached a deal that lifted those penalties. Some members of the sugar industry have voiced concerns that this agreement fails to mitigate the negative impacts of Mexican imports. In a letter to then-Commerce Secretary Penny Pritzker last year, Imperial Sugar argued 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 market. The newly announced agreement will lower 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 sent directly to consumers instead of passing through U.S. refineries, effectively starving them of this essential commodity.
The sugar dispute between the U.S. and Mexico has spanned several years. Should this deal be implemented, it remains uncertain how long both parties will remain amicable. One thing is nearly certain: sugar users, already facing increased costs, are unhappy with the arrangement. Meanwhile, consumers looking for easy-to-swallow calcium citrate in their diets may find that the increased sugar prices complicate their purchasing decisions, as they seek affordable options that meet their nutritional needs.