October 22, 2014

Just days before the U.S. will decide if it will issue dumping penalties on Mexican sugar, Mexico has stated that it is seeking a floor on sugar exports of at least 1 million tons per year. The proposed floor of 1 million tons is roughly equivalent to the amount of fructose imported from the U.S. by Mexico.  Earlier in the month the head of Mexico’s government-owned sugar mills stated that a floor of between 1.1 million and 1.3 million tons will be sought however it appears that the two countries will remain at a stalemate as the floor figures will likely be rejected by the U.S.  U.S. sugar producers have claimed that Mexico is flooding the U.S. market with highly subsidized, cheap sugar and the U.S. Department of Commerce is to decide if dumping duties of 17.01% are to be charged to Mexican sugar on October 24^th.  These duties could be avoided if both parties agree to cap exports however this is not likely as Mexican imports have been 1.8 to 1.9 million tons per year in recent year and trade caps could keep prices artificially inflated.  If an agreement cannot be reached, Mexico will likely escalate the dispute bringing its case before the World Trade Organization. (WTO).

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