(Updates with U.S. decision, background)
By Adriana Barrera
MEXICO CITY Aug 26 The United States will slap
anti-subsidy import duties on Mexican sugar, sources said on
Tuesday, a move that could push up candy and soft drink prices
for U.S. consumers and incite retaliation from Mexico on other
The duties, if confirmed, will bolster prices for U.S. sugar
but mean companies like candy makers Hershey Co and
Mondelez International Inc will have to pay more for
The preliminary decision to slap duties on sugar imports
from Mexico, which could still be overturned, is backed by U.S.
sugar industry complaints of unfair competition from subsidized
sweeteners in the industry's first trade case in decades.
Sources told Reuters the duties were as much as 17.01
The preliminary determination means the U.S. Department of
Commerce found Mexican imports benefited from government
U.S. sugar producers have claimed cheap imports from Mexico
are causing nearly $1 billion in damages in the local market.
Juan Cortina, president of the Mexican sugar chamber, said
the Mexican sugar industry is prepared to agree to a deal that
limits sugar exports to the United States, but said any
agreement would have to fix an export minimum of at least 1
million tonnes per cycle.
He said the chamber believed a deal could be reached before
the United States resolves a separate anti-dumping case in
U.S. sugar users and manufacturers and Mexican mills have
fought against the case, arguing the case could prompt Mexico to
retaliate on other products like high-fructose corn syrup and
inflate the cost of a key raw material. The United States is a
net sugar importer.
They also argue that any restrictions on sugar imports, even
as part of a brokered deal, would undermine free trade across
the continent under the North American Free Trade Act.
"I think this is an area where consumers would be a lot
better off if the market were simply allowed to operate freely
without either government intervention or deals being cut by the
growers," Bill Reinsch, president of the National Foreign Trade
Council, said on Tuesday.
"The likely result is that the growers, particularly in the
United States, will make more money, and the consumers will pick
up the tab."
Concerns about tightening supplies in the United States,
even as the global market remains in surplus, have pushed
domestic prices up 18 percent since the case was first filed in
"Even a small duty could mean a lot of money," said one U.S.
sugar importer. "We're apparently going to be short of sugar in
the United States market, so prices will come up to a level that
compensates for any duty."
Second-month U.S. domestic raw sugar futures traded
in New York jumped 2.7 percent to a two-week high of 26.75 cents
a lb in thin trade on Tuesday.
(Additional reporting by Chris Prentice in New York and Krista
Hughes in Washington; Writing by David Alire Garcia; Editing by
Simon Gardner, Marguerita Choy and Andrea Ricci)