May 20, 2017 / 3:43 AM / in 7 months

Mexico sugar firm calls on President to protect industry from U.S. deals

MEXICO CITY (Reuters) - A Mexican sugar company on Friday called on the Mexican government to take action against American fructose producers and defend local sugarcane producers from agreements with the United States that regulate the sugar trade.

In a letter to President Enrique Pena Nieto, liquid sugar firm Sucroliq argued that 2014 “suspension agreements,” which ended a long-running trade dispute over sugar between the United States and Mexico, have hit local cane producers who have no voice in ongoing talks to modify the accords.

“The United States is doing the right thing, defending its farmers. In Mexico, they sacrifice them,” said the letter, signed by Sucroliq President Enrique Bojorquez. “They are the ones who have to absorb the cost of this negotiation,” he added.

The U.S. sugar industry pressed the U.S. Commerce Department late last year to withdraw from a 2014 agreement that sets prices and quotas for U.S. imports of Mexican sugar unless the deal could be renegotiated.

The U.S. sugar lobby wants Mexico to export less refined sugar and has become emboldened since Donald Trump took office in January.

The two countries are approaching the deadline to renegotiate the “suspension agreements” on June 5 after which Mexican sugar could face high tariffs if a deal is not reached.

Tensions over sugar bode poorly for upcoming talks to update the North American Free Trade agreement, which Trump vowed to scrap if he cannot renegotiate it to benefit U.S. interests.

Mexican sugarcane farmers estimated income losses of about 6 billion pesos($321 million).

Limitations faced by Mexican sugar in the United States due to the suspension agreements mean refiners are forced to seek out markets with lower prices than those in the United States.

U.S. fructose, which faces no restrictions in Mexico, is sold at lower prices and has displaced some of the sugar consumption in the country.

“Cheap fructose comes in. It forces national sugar production into other markets,” said Carlos Blackaller, president of the sugarcane producers union. Americans “limit exports or displace it with fructose,” he said.

Writing by Alexandra Alper; Editing by Simon Cameron-Moore

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