Following the first ever challenge brought under a 35-year-old U.S. trade law, the U.S. International Trade Commission (“ITC”) unanimously determined that the agreements to suspend the antidumping and countervailing duty (“AD/CVD”) investigations (“suspension agreements”) “eliminate completely the injurious effects” to the domestic sugar industry of imports of raw and refined sugar from Mexico.[1]  

In doing so, the ITC rejected the two petitioning U.S. sugar refiners’ arguments that the suspension agreements—which set price floors and volume restrictions on Mexican sugar imports entering the United States—will lead to Mexico shipping less raw sugar, and more refined sugar, to the United States, thereby reducing the supply of raw sugar available to U.S. refiners and increasing competition for their finished product (refined sugar). 

First, the ITC interpreted the statute as requiring the Commission to determine whether the injurious effects of the subject imports on the “domestic industry as a whole” were eliminated by the suspension agreements.  In reaching this determination, the Commission rejected the sugar refiners’ arguments that it should analyze the Mexican imports had an injurious effect on particular segments of the domestic industry .  In this case, the ITC defined a single “domestic industry” encompassing all producers of sugar within the scope of the investigations, including growers, millers, cane refiners, and beet processors.

Second, the ITC interpreted the statute as requiring the Commission to determine whether the suspension agreements eliminated the injurious volume and price effects of the sugar imports from Mexico—not any injury caused to parts of the domestic industry by the suspension agreements themselves, as argued by the two sugar refiners:

In our view, sections 704(h) and 734(h) [of the Trade Agreements Act of 1979] do not provide a vehicle for remedying any commercial disadvantage the petitioning refiners may incur insofar as the agreements eliminate the benefits petitioning refiners received by the availability of low-priced raw sugar from Mexico.

The ITC concluded that the suspension agreements eliminate completely the injurious effect of subject imports by making it impossible for subject import volumes and prices to return to the injurious levels that prevailed previously.

This is the first time that the ITC has conducted a review under this subsection of the U.S. trade law and, thus, the first time the ITC had the chance to interpret and apply that subsection.  The two petitioning sugar refiners have indicated they will challenge the ITC’s decision before a higher court.  Further, the U.S. Department of Commerce is expected to decide whether the two sugar refiners have standing to request the continuation of the underlying AD and CVD investigations.