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Mexico and US engaged in bitter dispute over sugar

AFP  |  Puebla 

A looming trade conflict with the United States over sugar is threatening to disrupt the livelihood of residents in sugar cane growing regions like the central Mexican town of Atencingo. Mexico has until June 5 to reach an agreement with for its sugar to continue entering the US market duty-free. Mexico exported 1.1 million tonnes of sugar to the United States in 2016, according to figures. Sugar cane day laborers here earn between 600 and 700 pesos (USD 32-USD 38) a day, a salary that most need to support their families. If no deal is reached their livelihoods are in danger, as US trade officials are threatening to slap tariffs of up to 80 per cent on Mexican sugar The dispute comes as the two neighbors, along with Canada, are set to renegotiate the North American Agreement (NAFTA). "If you cut, you earn money," said day laborer Enrique Gonzalez, 31, as he hacked away at the cane stalks and piled them up. "If you don't cut, you earn nothing." Gonzalez spoke as part of his sugar cane field was on fire. Thick columns of smoke reached to the sky as flames destroyed the cane's straw tops and leaves. Machete-wielding workers like Gonzalez later enter the fields and cut down the scorched stalks, which are loaded onto trucks and driven to processing plants for pressing.

The resulting syrup is crystallized and processed into sugar. Failure to reach an agreement would set a bitter tone ahead of NAFTA renegotiation talks, likely to begin in August. "It would force the Mexican to toughen their positions at the time of renegotiations, both in political and economic terms," said trade attorney Alejandro Luna. Mexican sugar has entered the US market tariff-free since 2008. In exchange, the Mexican market was opened to US corn- based fructose, used mainly to sweeten soft drinks. US sugar companies and farmers have long accused Mexico of flooding the US market with subsidized sugar sold at below-market prices, and in 2014 both governments agreed to Mexican sugar export quotas. But complaints from US sugar concerns continued, and last year and Mexico City restarted sugar trade talks. "If they set tariffs, they'll remove us from the market," said Juan Cortina, head of the CNIAA, the trade chamber representing sugar producers. The CNIAA in turn has opened its own anti-dumping probe against American fructose Mexico buys some 1.6 million tonnes of fructose each year, Cortina said. The Mexican finance ministry said in early May that the US companies are complaining in part because they want to "eliminate the competition ... Of refined sugar from Mexico.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, May 18 2017. 21:22 IST