Regional News U.S., Mexico reach sugar pact despite U.S. producer resistance

WASHINGTON/NEW YORK, (Reuters) - Mexico yesterday conceded to U.S. demands for changes in the terms of Mexican access to the lucrative U.S. sugar market, striking a deal with Washington that will likely lift prices of the sweetener to U.S. food processors and consumers.

Sugar producers in the United States refused to endorse the agreement in principle between the two governments after pushing for even more concessions from Mexico, raising the possibility that the deal could collapse.

The agreement in principle between U.S. Commerce Secretary Wilbur Ross and Mexican Economy Minister Ildefonso Guajardo aims to resolve a long-standing trade dispute between the two countries.

Without it, the United States could have reimposed steep import duties on its southern neigbour and risked the prospect of a retaliation from Mexico just as the two countries and Canada prepare to renegotiate the North American Free Trade Agreement this year.

Under the deal, Mexico would sharply reduce the share of refined sugar it exports to the United States and increase raw sugar exports.

“We have gotten the Mexican side to agree to nearly every request made by U.S. industry to address flaws in the current system and ensure fair treatment of American sugar growers and refiners,” Ross told a news conference.

Still, Ross said the U.S. sugar producers had told him that they could not accept the deal in its current form, but he hoped that they would agree to some changes in a final drafting of the agreement in the next several days.

He did not elaborate on what action the Commerce Department would take if there were no final agreement with the U.S. producers. It was unclear if Ross would impose the settlement if U.S. producers did not sign onto it.

The agreement lifts the minimum prices for Mexican imports, which will likely be passed on by U.S. sugar refiners to food companies and beverage and confectionary producers and ultimately to consumers.

A trade group that represents a coalition of U.S. sugar buyers and other firms that are critics of the U.S. program said the deal favored the interests of U.S. sugar producers, and estimated the cost to the consumers in higher prices for food, drinks and confectionary at around $1 billion.