Industry Groups Criticize American Sugar Coalition's Push for AD Duties
The American Sugar Coalition’s claim that Mexican sugar imports have injured U.S. industry lacks merit and should be rejected by the International Trade Commission (ITC), said a number of private industry officials during a National Foreign Trade Council roundtable on April 28. The Commerce Department and ITC launched antidumping and countervailing duty investigations on Mexican sugar, in response to the American Sugar Coalition's petition in March (see 14042101). The ITC is due to make its preliminary determination on May 12.
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“Imports from Mexico did not displace any domestic production in the period that we’re looking at. In fact, the U.S. producers of sugar actually gained market share over the period of investigation that the ITC is reviewing,” said Paul Rosenthal, partner at Kelley Drye and counsel for the Sweetener Users Association. “So there is no volume impact. That is what the petitioners have to prove.” The period of investigation spans from 2011 to 2013. U.S. market share of production and imports increased from 67.7 percent in 2010-11 to 73.1 percent in 2013-14, according to Agralytica Consulting analysis released at the roundtable.
The Mexican import prices during the investigation period also closely resemble U.S. prices, said Rosenthal, despite American Sugar Coalition allegations of dumping. “The Department of Agriculture has made it very, very clear that it’s the U.S. additional production that was the price leader … the U.S. production that was driving down prices, not the Mexican imports that were simply supplementing the U.S. market and replacing TRQ imports at prices that were comparable to the TRQ imports,” said Rosenthal.
The tariff rate quota (TRQ) on raw cane sugar remained at 1,117,195 metric tons raw value, the minimum amount U.S. is obligated to permit under World Trade Organization agreement, from fiscal year 2011 to 2014, according to the Office of the U.S. Trade Representative (here). But revisions have taken effect, such as a fiscal year 2012 increase to the TRQ (here). Mexican sugar now enters the U.S. duty-free under NAFTA (here). The TRQ was not filled during the investigation period because of poor production abroad, not because of Mexico dumping, said Rosenthal.
The futures price for U.S. raw cane sugar reached 40 cents per pound in 2010-2011, while the futures price for world raw cane topped 30 cents per pound the same year, said the Agralytica Consulting analysis. “They were at record levels. They’re going to come down from record levels,” said Tom Earley, vice president for Agralytica Consulting and an economist at Sweetener Users Association. “But where we are now, where prices were before they filed their suit, was right in the middle of the range in which historically the sugar program has generally kept sugar prices … 25 to 30 cents a pound.” The 2014 Farm Bill renewed the sugar program through 2018 (here).
Agriculture Secretary Tom Vilsack criticized the petition recently in testimony before the House Agriculture Committee, adding that Mexico diverted 700,000 tons of sugar originally intended to go to the U.S. in 2013 (see 14041608). The diverted sugar, drawn from both the public and private sector, actually topped off at more than a million tons, said Irwin Altschuler, an attorney at Greenberg Traurig and the Mexican Sugar Chamber counsel, at the roundtable. “If you look over the three year period of investigation, not only are all the financial indicators favorable to the U.S. industry, not only was their market share up, but it was the most profitable three years in the industry’s history,” said Altschuler.
The American Sugar Coalition will likely lose at the ITC, said Rosenthal. The ITC approves roughly 90 percent of cases at the preliminary stage, said National Foreign Trade Council President Bill Reinsch. -- Brian Dabbs