Hours before U.S. regulators were poised to penalize Mexican sugar imports, the United States and Mexico reached an agreement to set a price floor on imported sugar and to suspend anti-dumping and anti-subsidy duties. The dispute began in April 2014 when the U.S. Department of Commerce initiated an investigation following petitions from the U.S. sugar industry complaining of unfair pricing and government subsidies on Mexican sugar.

Under the agreement, Mexico will reportedly be allowed to meet any demand for sugar in the United States after U.S. producers and other countries with fixed quotas have exhausted their supplies. Mexican producers will sell their sugar for no less than $0.2075 per pound for raw and $0.2357 per pound for refined.

“We believe these Agreements, which work in concert with the U.S. sugar program, effectively address the market-distorting effects of any unfairly traded sugar,” Assistant Secretary of Commerce for Enforcement and Compliance Paul Piquado said in an October 27, 2014, International Trade Administration press release. In response, the Sweetener Users Association (SUA) issued a statement reflecting concerns that the agreement will lead to market uncertainty, which may in turn lead to unfairly high sugar prices for consumers and food and beverage manufacturers. Citing the North American Free Trade Agreement, SUA said that “there has been free trade in sugar since early 2008. Entering into a managed trade agreement would not only set a bad precedent for our bilateral trade relationship, it would move America’s already protectionist sugar policy in the wrong direction, farther away from a free market approach.” Information about a letter submitted by U.S. senators urging the Commerce Department not to impose quotas on Mexican sugar imports appears in Issue 532 of this Update. See International Trade Association Press Release, October 27, 2014.