US Commerce Secretary Wilbur Ross announced Tuesday that he had reached “an agreement in principle” with his Mexican counterpart, Economy Minister Ildefonso Guajardo, on a new trade deal governing the trade of raw and refined sugar between the US and Mexico.
There’s only one problem: The US sugar industry has said it’s unable to support the agreement in its current form, according to Reuters.
Ross said that Mexico met nearly every request by the US sugar industry to fix problems with a 2014 sugar trade agreement.
"Unfortunately, despite all of these gains, the U.S. sugar industry has said it is unable to support the agreement in its present form," Ross said without elaborating on their objections.
Ross added that the agreement will now go through a final “drafting” stage during which he hopes the US sugar industry would come on board. He added that “it should be days, not weeks” before the final agreement is reached, Reuters reported.
The American Sugar Alliance said in a statement that the exiting agreement could allow Mexican producers to exploit a “loophole” allowing them to continue to dump subsidized sugar into the U.S. market.
“This loophole takes away the existing power of the U.S. government to determine the type and polarity of any additional sugar that needs to be imported and cedes that power to the Mexican government,” the Alliance said in a statement.
“We will work with Secretary Ross in the coming days to see if that loophole can be effectively closed so that the basic provisions of the agreement are not undermined and USDA can effectively manage the sugar program”
The "deal," in its current form, leaves Mexico’s overall access to the US market essentially unchanged: The biggest difference is that refined sugar must fall to 30% of overall imports from Mexico, down from a previous limit of 53%. Thanks to protections granted to the US sugar industry by Nafta, sugar prices in the US are higher than anywhere else in the world.
The US sugar industry late last year pressured the Commerce Department to withdraw from an agreement with Mexico that set a fixed system of prices and quotas on imported Mexican sugar. Mexico struck back in March by canceling export permits for sugar being shipped to the US, putting the squeeze on US refiners who were struggling with high prices and tight supplies.
Iowa Sen. Chuck Grassley said that the deal between Mexico and the US “bodes well” for Nafta talks. We imagine that'd be true...if the two sides can reach an honest-to-god agreement, not...whatever this is.