How Will a Fight Over Sugar Affect U.S.-Mexico Trade Ties?

Editor’s note: In the Featured Q&A of the Inter-American Dialogue’s daily Latin America Advisor, Andrés Rozental responds to U.S. plans to tax sugar imports from Mexico and discusses the significance for U.S.-Mexico trade relations.

Andrés Rozental

Nonresident Senior Fellow, Latin America Initiative

This is another most unfortunate development in trade relations between Mexico and the United States. What the North American Free Trade Agreement accomplished—an end to Mexico’s sugar export quota to the United States—is being undercut by the actions of the U.S. sugar industry and the decision by the Department of Commerce to slap countervailing duties on Mexican sugar imports. It is a well-known fact that the U.S. sugar industry itself receives huge domestic subsidies through price support mechanisms that clearly violate international trade rules. Mexico has been a reliable provider of sugar to the U.S. market and in turn imports considerable amounts of high fructose corn syrup (HFCS) for its soft drink and other industries.

The actions by the American Sugar Coalition are nothing more than protectionist attempts to reduce competitive imports from Mexico. Together with other trade actions against Mexico involving steel products and beef exports, the United States is demonstrating its disregard for international agreements meant to facilitate, rather than prevent, free trade with its NAFTA partner. Even though I expect there will eventually be a compromise bilateral agreement between both countries in order to avoid a full-blown trade war that can only harm producers and consumers of sugar and HFCS, in my opinion Mexico should lodge a subsidy complaint at the World Trade Organization in Geneva against the U.S. sugar price support mechanism that gives domestic producers an unfair advantage and allows for this type of action against Mexican exporters.

This piece, along with other expert responses, was initially published in the Inter-American Dialogue’s daily
Latin America Advisor