On May 9, 2014, the United States International Trade Commission (ITC) made a preliminary determination that the U.S. sugar industry has been materially injured by reason of imports of sugar from Mexico. As a result of this affirmative determination, the U.S. Department of Commerce (DOC) will continue to conduct its antidumping and countervailing investigations on Mexican sugar. DOC will make its preliminary determinations later this year.
U.S. sugar producers filed the petitions in March, alleging the Mexican industry has exported sugar to the United States at dumping margins of 45 percent or more and has received substantial subsidies from Mexican federal and state governments. According to the petitioners, the unfair trade practices by the Mexican sugar producers and exporters will cost the U.S. sugar industry $1 billion this year.
U.S. sugar users are, however, criticizing the investigations; the Sweetener Users Association described the petitions as "nothing more than a diversionary tactic to shift blame for sugar market distortion from the failed U.S. sugar program to Mexico." According to the organization, the changes made to the sugar program in the 2008 farm bill caused U.S. sugar prices to rise above the world price and incentivized growers in both Mexico and the United States to increase production.
Under the North American Free Trade Agreement (NAFTA), Mexican sugar growers can export sugar to the United States on a tariff-free and quota-free basis. This, however, does not mean that they can export subsidized sugar to the United States or even export nonsubsidized sugar at prices below the fair market value.
The antidumping and countervailing investigations cover imports of raw, estandar (standard), and refined sugar derived from sugarcane and sugar beets. Liquid sugar, inedible molasses and specialty sugar (e.g., rock candy, fondant, sugar decorations) are not included. At the preliminary phase of the investigations, ITC had to address three questions regarding the scope of domestic like product that corresponds to Mexican sugar: (1) whether ITC should define separate like products corresponding to raw and refined sugar; (2) whether ITC should define separate like products corresponding refined cane sugar and refined beet sugar; and (3) whether the domestic like product should include high fructose corn syrup. ITC answered no to each of these questions.
On the question of injury, five of ITC's six commissioners voted to find that there is a reasonable indication that U.S. sugar industry has been materially injured by reason of imports of sugar from Mexico. Commissioner Rhonda K. Schmidtlein, who was sworn in recently, did not participate in the investigations. Final determinations by ITC and DOC may not be issued until 2015.