US, Mexico Negotiate Preliminary Sugar Deal as Industry Balks

While this agreement is not yet being supported by the USA sugar industry, the government was positive that the Mexican side had agreed to every request made by the us industry to address the issues in the current system.

US Commerce Secretary Wilbur Ross said the new deal will "address the flaws in the current system" and protect American sugar refiners, confectioners and soft drink makers from harm caused by imports of subsidised Mexican sugar.

Since the new deal is an agreement in principle, there remains the possibility that it may not stand since USA sugar producers, who filed the original dumping charges against Mexico, oppose it due to the aforementioned "loophole".

"We have gotten the Mexican side to agree to almost every request made by USA industry to address flaws in the current system and ensure fair treatment of American sugar growers and refiners", Ross told a news conference.

"The agreement prevented potentially significant and retaliatory actions by the Mexican sugar industry and sets an important tone of good faith leading up to the renegotiation of the North American Free Trade Agreement".

Mexican Economy Minister Ildefonso Guajardo on June 1 said he was reviewing the request by the Mexican sugar lobby to initiate the investigation.

Ross said the agreement will be finalized "in days, not weeks or months".

Producers gave a similar answer - 63% - when asked how renegotiation would affect the USA economy overall.

The new agreements between the governments of the United States and Mexico, as well as the Mexican sugar industry, prevent dumping of Mexican sugar and corrects for subsidies the Mexican sugar industry receives.

It also allows the Mexican government the ability to determine the purity of the sugar it exports under these conditions, Hayes said.

Still, Ross said the US sugar producers had told him that they could not accept the deal in its current form, but he hoped that they would agree to some changes in a final drafting of the agreement in the next several days. With Tuesday's accord, the maximum purity for raw-sugar imports will now be 99.2 percent, ensuring that the product will head to US refineries for further processing.

The US commerce chief noted that the "agreement in principle" has faced scepticism among some players in domestic industry, while pledging to continue talks with those businesses as the process to finalise the new "suspension agreement" continues. The alliance wants the U.S. Department of Agriculture to have the final say on the type of sugar to be imported.

"This agreement protects American workers and consumers and marks a dramatic improvement for the USA sugar industry". We must ensure that this deal will protect MI sugar beet farmers and the 142,000 jobs this vital industry supports across the country. Their ostensible reason - that provisions for Mexico to supply additional USA needs after April 1 of each year constitute a "loophole" - is absurd on its face and demonstrates that the sugar lobby is simply trying to extract additional concessions, despite having gotten what it asked for.

In addition, the price of raw sugar would rise from 22.25 cents per pound to 23 cents, while the price of refined sugar would increase from 26 cents per pound to 28 cents, Guajardo said.

Raw vs. refined split - The new agreement also reduces the percentage of refined sugar that may be imported, from 53 percent to 30 percent.

However, the news of the agreement in principle was welcomed by the US Corn Refiners Association, which called it a "great day for American jobs". Pork producers are hopeful that any such concerns can be addressed, without jeopardizing the important benefits that they and many other sectors continue to reap thanks to NAFTA.

Senate Agriculture Committee ranking member Debbie Stabenow, D-Mich., said, "While I appreciate Secretary Ross and Secretary Perdue's work to strengthen trade enforcement with Mexico, our sugar farmers still have concerns that this agreement does not go far enough".