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U.S., Mexico Finalize Deal to Avoid New AD/CV Duties on Sugar Imports

Tuesday, December 23, 2014
Sandler, Travis & Rosenberg Trade Report

The Department of Commerce announced Dec. 19 that it has finalized agreements with the government of Mexico and Mexican sugar exporters to suspend its antidumping and countervailing duty investigations of Mexican sugar. The finalized deals incorporate several changes from the draft suspension agreements that Commerce initialed on Oct. 27, including a revised definition of refined sugar and adjustments to the reference price.

The agreements immediately suspend the AD and CV investigations, allow Mexican sugar to enter the U.S. market free of AD/CV duties, and create mechanisms to ensure that imports of Mexican sugar do not injure the U.S. sugar industry while enabling U.S. sugar consumption needs to be met. Highlights of the agreements include the following.

- The CV agreement contains provisions to prevent an oversupply of sugar in the U.S. market. Specifically, the DOC will calculate an export limit for Mexico based on information it obtains from the U.S. Department of Agriculture about the U.S. needs for sugar in a given year. The agreement will also prevent imports from being concentrated during certain times of the year and will limit the amount of refined sugar that may enter the U.S. market from Mexico.

- Mexico’s export limit is set at 100% of U.S. needs after accounting for U.S. production and imports from tariff-rate quota countries.

- The government of Mexico will allocate the amount of sugar that each Mexican sugar producer/exporter can export to the United States. Sugar from Mexico will not be able to enter the U.S. if it is not accompanied by an export license.

- The AD agreement establishes reference prices to guard against undercutting or suppression of U.S. prices, specifically $0.26 per pound by dry weight commercial value for refined sugar and $0.2225 per pound by dry weight commercial value for all other sugar.

 - For purposes of these agreements, “refined sugar” is defined as sugar with a polarity of 99.5% or greater while “other sugar” is sugar that does not meet the definition of refined sugar. The CV agreement caps exports of refined sugar at 53% of total exports from Mexico.

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