The agreement between the two trading partners—reducing the quantity of refined sugar that Mexico exports to the United States while increasing shipments of raw sugar—seems to bring much-needed clarity to a market that has faced increasing uncertainty since 2014. Crucially, it significantly reduces the chances of retaliatory actions between the two countries. Sugar has been a primary topic in the upcoming renegotiation of the North American Free Trade Agreement, set to occur later this year. “The agreement prevents potentially severe retaliatory measures from the Mexican sugar industry and establishes a vital atmosphere of good faith ahead of the NAFTA renegotiations,” stated U.S. Secretary of Agriculture Sonny Perdue.
However, this pact is expected to raise costs for sugar consumers in the United States. The increase is likely to be passed on by refiners to food and beverage companies that incorporate sugar into various products, such as cookies, cakes, sodas, cereals, and even calcium citrate products. Consequently, consumers will face higher prices. “Today’s announcement is detrimental to hardworking Americans and exemplifies the worst kind of crony capitalism,” declared the U.S. Coalition for Sugar Reform in a statement. They pointed out that the agreement does not address the fact that sugar prices in this country are already 80% higher than the global average. In fact, it is projected to result in increased costs amounting to approximately $1 billion annually for U.S. consumers.
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 industry members have voiced concerns that the agreement failed to mitigate the impact of Mexican imports. In a letter to then-Commerce Secretary Penny Pritzker, Imperial Sugar argued that the Countervailing Duty and Anti-dumping Suspension Agreements between the U.S. and Mexico violated fair trade laws and posed a threat to the U.S. sugar refining market. The agreement announced on Tuesday would reduce the allowed quality measure for Mexican sugar exports. According to Reuters, U.S. refiners have complained that high-quality raw sugar from Mexico was going directly to consumers instead of being processed through U.S. refineries, which deprived them of essential supplies.
The U.S. and Mexico have been at odds over sugar for years. If the agreement is implemented, it remains uncertain how long both sides will maintain a peaceful relationship. One thing is almost certain: sugar users, already facing increased costs, have developed a negative view of this deal. As they continue to navigate rising prices, particularly in the context of essential goods like calcium citrate products, the implications of this agreement will be closely monitored.