Court blocks change to US-Mexico sugar trade, intended to address price issues

By Kristine Sherred

- Last updated on GMT

Sugar has been a target of free trade complaints since 2008, when changes to NAFTA eliminated tariffs on many agricultural goods traded in North America. Pic: Getty Images/baianliang
Sugar has been a target of free trade complaints since 2008, when changes to NAFTA eliminated tariffs on many agricultural goods traded in North America. Pic: Getty Images/baianliang

Related tags Sugar Sugar beet USMCA Mexico Trade deal tariffs Asa Ingredients

The US International Trade Court sided with CSC Sugar, a refiner, in a case regarding a 2017 amendment to the purity of sugar traded between the US and Mexico.

The US Department of Commerce failed to keep accurate administrative records of CSC’s position in the matter, which the court said could not be considered ‘harmless.’

It aimed to buoy domestic sugar producers, but CSC felt the pact restricted its access to cheaper Mexican sugar imports​, Reuters reported.

Background of sugar dispute

In 2014, at the behest of the American Sugar Alliance, the US and Mexico reached a suspension agreement intended to address lower prices on Mexican sugar, thus harming the ability for US sugar companies to compete.

According to the ASA, the foremost trade group representing sugar and beet suppliers, policy set by changes to NAFTA (the North American Free Trade Agreement) in 2008 cheapened the cost of foreign sugar. The US imports more sugar from 41 countries, the ASA says.

In 2017, the commerce department amended this pact with Mexico: changing the definition of ‘refined sugar’ to a less pure version (99.2 degrees polarity from 99.5) and increasing the amount of raw import mix permitted to enter the US from Mexico.

The original 2014 suspension required an import mix of 53% refined and 47% raw sugar; the 2017 amendment decreased the refined number to 30% and upped the raw import allowance to 70%.

Connecticut-based CSC filed a suit claiming that the commerce department had deliberately omitted it from the formal administrative paperwork – a violation of US trade law [19 U.S.C. § 1677f(a)(3)].

Victory for imported sugar

In its October 18 opinion, the court determined that the commerce department acted in impropriety and thus harmed the plaintiff, CSC. Though the government insists it followed procedure – CSC was indeed involved with the conversations, according to court documents – it “failed to maintain and provide a complete administrative record…[and] foreclosed any opportunity for [CSC] to inspect or comment.”

The procedural ruling means that the US and Mexico must vacate this amendment and return to the 2014 agreement.

Jeffrey Neeley of Husch Blackwell, CSC’s law firm, said his team was pleased at the decision “concerning recordkeeping and material information that was not placed on the record,”​ adding they would seek a ‘lasting solution’ to the issues​ raised by this case.

Phillip Hayes, spokesperson for the ASA, told ConfectioneryNews: “The CIT’s recent ruling was purely a decision based on Department of Commerce record-keeping procedures and has nothing to do with the merits of the suspension agreements. The US sugar industry is considering its legal options and consulting on next steps with the commerce department.”

In the shadow of this niche issue, the US Congress is still considering the broader US-Mexico-Canada trade agreement (USMCA).

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