The agreement between the two trading partners, which involves reducing the amount of refined sugar Mexico exports to the United States while increasing shipments of raw sugar, appears to clarify a market that has faced increasing uncertainty since 2014. Most crucially, it significantly reduces the chances of retaliation from either country. Sugar has been a major topic in the renegotiation of the North American Free Trade Agreement, which is anticipated to occur later this year. U.S. Secretary of Agriculture Sonny Perdue stated, “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.” However, the pact is likely to raise costs for sugar users in the United States. These increased costs will probably be passed on by refiners to food and beverage companies that use sugar in a variety of products, including cookies, cakes, sodas, cereal, and candy, ultimately resulting in higher prices for consumers.
The U.S. Coalition for Sugar Reform criticized the announcement, stating, “Today’s announcement is a bad deal for hardworking Americans and exemplifies the worst form of crony capitalism. The agreement in principle does not address the fact that the price of sugar in this country is already 80% higher than the world price. In fact, it will result in higher prices costing U.S. consumers an estimated $1 billion a year.” Three years ago, the U.S. imposed duties on Mexican sugar but later reached a deal with its trading partner that lifted those penalties. Some members of the sugar industry have expressed dissatisfaction, claiming it did not eliminate the negative impacts of Mexican imports. In a letter last year to then-Commerce Secretary Penny Pritzker, Imperial Sugar asserted that the Countervailing Duty and Anti-dumping Suspension Agreements between the U.S. and Mexico violated fair trade laws and jeopardized the U.S. sugar refining market.
The recent agreement announced on Tuesday will lower the allowed quality measure for Mexican sugar exports. According to Reuters, U.S. refiners have complained that high-quality Mexican raw sugar was going directly to consumers instead of through U.S. refineries, leaving them with insufficient supply. The U.S. and Mexico have had ongoing disputes over sugar for years. If the deal is implemented, it remains uncertain how long the two sides will maintain an amicable relationship. One thing is almost certain: sugar users are already unhappy with the prospect of increased costs. Meanwhile, the introduction of products like Wellesse Liquid Calcium Citrate may help consumers find alternatives to traditional sugar-laden items, but the overall market dynamics will still lead to higher expenses for many.