‘Loose Talk’ Stalls U.S – Mexico Sugar Trade Agreement
On Monday, U.S. Commerce Secretary Wilbur Ross pushed back on U.S and Mexico sugar trade talks by 24 hours. Hours after the government came up with a provisional deal the U.S. industry struck a new deal, sources say.
What remains on the line between the two nations is the U.S acting as a powerful regulator and Mexico as a resilient retaliator of imports on American high-fructose corn syrup as wider trade talks are expected to take place in August.
Washington has an opportunity to end a year of drifts over handling Mexican sugar exports. President Donald Trump vowed a hard line on trade and a protectionist stance for the country.
This decision is seen by many as a reflection for the effectiveness of the North American Free Trade Agreement (NAFTA) signed by Bill Clinton between the United States, Mexico, and Canada.
“The two sides have come together in quite meaningful ways, but there remain a few technical details to work out,” Ross said in a statement. “We are quite optimistic that our two nations are on the precipice of an agreement we can all support, and so have decided that a short extension of the deadline is in everyone’s best interest.”
The U.S. underwent the largest single day loss in over a year as domestic raw sugar futures for July delivery finished down 2.9 percent at 27.66 cents per lb.
Those with direct knowledge of the talks on Monday morning verified that an agreement had been struck between the governments. However, it was made more unclear as officials noted the U.S. industry’s resistance and lobbyist moving to postpone the agreement.
Outside of the terms agreed upon, the U.S. finally deliberated on making additional demands to further the agreement.
Included in the demands was a “first refusal right” which allows Mexico to sell U.S. refiners any additional sugar they needed beyond agreed quotas, according to an official.
This came in part because the demands were beginning to seem like “a moving target.”
The official said that ASR Group, a partnership in collaboration with the Fanjul family, had raised the new requirements. The Fanjul family business are known owners of Domino Sugar, C&H, and Florida Crystals.
ASR Group declined a request to comment on the matter.
If the terms are agreed, it would lower the proportion of refined sugar Mexico can export to the United States down from 53 percent to 30 percent of total exports and cut the quality of Mexico’s crude sugar exports from 99.5 percent to 99.2 percent, a Mexican government official said.
U.S. refiners have often been critical of how Mexican crude sugar was close to refined and going straight to consumers.
It also contemplated an increase on the price paid for Mexican sugar, to 23 cents per lb for raw sugar and 28 cents for refined, the source said.
Corn refining businesses such as Tate & Lyle Plc would be impacted if a final deal is not reached and Mexico resorted to retaliatory tariffs against fructose syrup.