The U.S. International Trade Commission said Friday there is “a reasonable indication” that the U.S. sugar industry has been hurt by subsidized Mexican sugar being dumped in the market.
As a result of the 5-0 ITC vote, the U.S. Department of Commerce will continue investigating claims of sugar being sold at less than fair value. The DOC is expected to make a preliminary ruling about Mexican subsidies and dumping later this summer, and preliminary duties could be levied at that time. Final rulings by DOC and ITC may not occur until 2015.
The American Sugar Cane League, which represents the Louisiana sugar cane industry and served as a petitioner in the case, said it was pleased with the ruling.
“We understand market changes, but market manipulation and dumping can’t be tolerated,” said Jim Simon, manager of the sugar cane league. “We had no choice but to bring our case to the ITC. If left unchecked, Mexico’s subsidized sugar production will overcome Louisiana’s 220-year-old industry, an industry that is vitally important to the economic, cultural and historic well-being of our state.”
U.S. sugar producers filed anti-dumping petitions with the ITC in March claiming that Mexico’s actions will cost the industry $1 billion this year. The petitions noted efforts by U.S. government officials to keep the market from collapsing under the surge of subsidized Mexican imports cost taxpayers $278 million in fiscal 2013.
In Louisiana, despite a top five all-time crop of more than 1.6 million tons of raw sugar in 2013, the value of the state’s crop dropped more than $250 million.
“Farmers are facing 2014 costs and getting 1980s prices,” Jack Roney, director of economics and policy analysis for the American Sugar Alliance, said earlier this year.
The Congressional Budget Office issued a report last month that predicted an oversupplied sugar market plagued by low prices and $390 million in resulting government expenditures from fiscal 2015 to fiscal 2024.
Mexico and the United States enjoy free trade in sugar under the North American Free Trade Agreement. The sugar alliance said that under NAFTA, the most efficient producers, not the most subsidized, should be rewarded but that questionable actions by Mexico are eroding a free and fair market.
“The ITC made the right decision today and validated our complaints,” said Phillip Hayes, a spokesman for the sugar alliance. “Mexico’s actions have harmed hardworking sugar producers as well as taxpayers. U.S. trade laws are designed to stop such injury, and we hope corrective actions will be taken soon before the situation deteriorates.”