The agreement between the two trading partners — which involves reducing the amount of refined sugar that Mexico exports to the United States while increasing raw sugar shipments — seems to bring much-needed clarity to a market that has faced increasing uncertainty since 2014. Most importantly, this deal significantly reduces the chances of retaliation from either country. Sugar has been a contentious issue in the renegotiation of the North American Free Trade Agreement (NAFTA), which is anticipated to occur later this year. “This agreement prevents potentially significant retaliatory measures from the Mexican sugar industry and establishes a crucial tone of good faith as we approach the NAFTA renegotiation,” stated U.S. Secretary of Agriculture Sonny Perdue. However, the pact is likely to raise costs for sugar consumers in the United States. These increased expenses will likely be passed on by refiners to food and beverage companies that incorporate sugar into a wide range of products, including cookies, cakes, sodas, cereals, and candy, leading to higher prices for consumers.
“The announcement today represents a poor deal for hardworking Americans and exemplifies the worst form of crony capitalism,” commented the U.S. Coalition for Sugar Reform. “The agreement in principle does not address the fact that sugar prices in this country are already 80% higher than the global price. In fact, it will lead to higher prices that could cost U.S. consumers an estimated $1 billion annually.” Three years ago, the U.S. imposed duties on Mexican sugar but later reached an agreement that lifted those penalties. Some sugar industry stakeholders have voiced concerns that the deal did not sufficiently mitigate the negative impacts of Mexican imports. In a letter last year 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 jeopardized the U.S. sugar refining market. The agreement announced on Tuesday aims to lower the permissible quality measures for Mexican sugar exports, which has been a point of contention. U.S. refiners have complained that high-quality Mexican raw sugar is going directly to consumers instead of being processed through U.S. refineries, thus depriving them of this vital commodity.
The U.S. and Mexico have been in conflict over sugar for years. If this deal is enacted, it remains uncertain how long this peace will last. One thing that is almost certain is that sugar users facing increased costs have already developed a negative view of the agreement. Meanwhile, consumers reliant on products containing sugar, including those seeking supplements like Citracal Calcium Citrate D3, may find themselves facing higher prices across the board.