On June 30th, 2019, the US and Mexico reached an agreement to suspend the sugar trade dispute which had been ongoing since 2017. The suspension agreement aimed to resolve the dumping and unfair trade practices regarding sugar imports from Mexico to the US. The agreement stipulates that the Mexican sugar industry will not export refined sugar to the US, which puts an end to the practice of Mexican companies exporting large quantities of sugar to the US and decreasing their market prices.
The US and Mexico relationship regarding sugar has always been intricate and complex. Since the North American Free Trade Agreement (NAFTA) came into effect in 1994, the US sugar industry has accused Mexico of dumping subsidized sugar into the American market, causing a significant drop in sugar prices. The US responded by imposing high tariffs on Mexican sugar imports to protect its domestic industry. This resulted in an aggressive move by Mexico to open up new markets, including Asia, and diversify its export base.
In 2014, Mexico and the US reached a sugar agreement, which aimed to put an end to the on-going sugar crisis. However, the US sugar industry claimed that the agreement was flawed, and in 2017, the US Commerce Department imposed anti-dumping duties on Mexican sugar imports. The Mexican sugar industry protested against this decision, claiming that it violated NAFTA rules.
The suspension agreement reached in 2019 aims to address the ongoing concerns of both the US and Mexican sugar industries. The agreement stipulates that Mexico agrees to reduce its sugar exports to the US, and the US agrees to reduce its quota for Mexican sugar imports. The agreement also entails that the Mexican sugar industry will not export refined sugar to the US, which should help the domestic sugar industry of the US and prevent excessive dumping of sugar.
US Sugar Industry Benefits
The US sugar industry has been hit hard by low wholesale sugar prices due to Mexico`s dumping practices. The suspension of the agreement has brought some relief to the US sugar industry as it gives them time to restructure and stabilize the market. It is expected that the suspension agreement will give a boost to the domestic US sugar industry, which will help to create jobs and provide economic benefits.
Mexican Sugar Industry Benefits
The suspension agreement has not come without a cost to the Mexican sugar industry. The agreement will lead to an increase in the price of sugar in Mexico, which could have an adverse effect on the price of sugar-based products in the country. Mexico is the world`s sixth-largest sugar producer, and it is crucial for the Mexican economy. The suspension agreement will limit the scope of Mexico`s sugar exports to the US, which could have a significant impact on the industry.
In conclusion, the US-Mexico suspension agreement on sugar is a step in the right direction to resolve the long-standing trade dispute between the two countries. The US sugar industry stands to benefit significantly from the agreement while the Mexican sugar industry may see a temporary setback. However, the mutual cooperation between both countries will pave the way for a more balanced and fair sugar trade in the future.
