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Mexico and US engaged in bitter dispute over sugar

AFP , Thursday 18 May 2017
Workers cut sugar cane in Atencingo, Puebla state, southern Mexico on May 11, 2017. Mexico has until June 5 to reach an agreement with Washington on whether or not sugar will continue to enter the US market tariff-free (AFP)
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Views: 2559

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 Washington for its sugar exports to continue entering the US market duty-free. Mexico exported 1.1 tonnes of sugar to the United States in 2016, according to government figures.

Sugar cane day laborers here earn between 600 and 700 pesos ($32-$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 percent on Mexican sugar imports.

The dispute comes as the two neighbors, along with Canada, are set to renegotiate the North American Free Trade Agreement (NAFTA).

"They pay us 36 pesos (about $1.8) the tonne" of cut sugar cane, said day laborer Enrique Gonzalez, 31.

"If you cut, you earn money," said the soot-covered Gonzalez, 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 government 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 Washington 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 imports. 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."

Sugar is central to the economy of places like Atencingo, located in Puebla state some 175 kilometers southwest of Mexico City and home to nearly 11,000 people.

For generations workers troop out between November and May to harvest the cane, then process it into sugar.

For the rest of the year many of them work in construction, or travel to the northern state of Sonora to harvest grapes.

"Sugar cane in this part of the state is synonomous with work and many years of tradition," said Gabriel Conrado, 57, who heads the regional farm laborers' union.

"We hope that... the negotiations reach a positive conclusion."

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