A US-Mexico sugar trade deal signed just under two years ago may not be working as intended, the US Department of Commerce said in notices on Tuesday after conducting a months-long review. The United States and Mexico hammered out the trade deal in 2014 to end a months-long probe of cheap, subsidized sugar that the US government decided was harming the American market. The review was requested by US sugar companies, which last month asked the deal be terminated.
Department of Commerce official Paul Piquado said in a memo on Tuesday that the government needs more information from the government and cane millers in Mexico to finish its review of the deal. Initial findings indicate the deal may not be meeting all requirements and that there may be some violations, the Commerce Department said.
The findings could be a blow to Mexico, which ships the bulk of its exportable surplus to its northern neighbour. The 11-million-tonne US sugar market is heavily protected through price supports and import quotas. For refiners ASR Group, the maker of Domino Sugar, and Louis Dreyfus Co's Imperial Sugar Co, the move would mark a victory. Both companies have said that the deal has been starving them of raw supplies and wiping out their profit margins.
The American Sugar Alliance, which represents members of the US industry that asked the trade pact be scrapped, welcomed the Commerce Department's preliminary decisions. "They confirm that both the antidumping and countervailing duty agreements are not working," said spokesman Phillip Hayes.
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