Sugaronline Editorial - Vaya 5 de Mayo By Meghan Sapp

Published: 05/05/2017, 8:53:00 AM

Mexico and the US are again posturing over sugar but who's really the weaker party?



Mexico and the US are again posturing over sugar but who's really the weaker party?

 


In the US, May 5th is a day full of sombreros, piñatas, cold Coronas and guacamole galore, a rich celebration of Mexican stereotypes, a culture that is as intrinsic to American life as hot dogs and the 4th of July. But south of the border, Mexico celebrates its independence, its identity, its cultural cohesiveness in a colourful spectacle that reaches into the heart of every pueblo. And yes, there’s probably some guacamole too.

So, what better day to stick it to the Americans?

That’s what the head of the Mexican sugar chamber wants to do if the US Department of Commerce decides to reinstate import duties on Mexican sugar. The chamber is seeking an anti-dumping investigation into American HFCS or even banning the import of American HFCS outright. As the main importer of American HFCS, Mexico’s sugar industry knows that if it wants to get America’s attention, it can cause some real pain right in America’s heartland. Corn country.

In reality, the Mexicans aren’t sticking it to the Americans nor is it vice versa. It is a trade spat that has spiraled out of control and devolved into threats and posturing. When the two sides sat down this week to try to hammer out an update to the suspension agreement that keeps the US from imposing import duties on Mexican sugar, they found themselves between a rock and a hard place. And a deadline.

So when negotiations fail to reach a deadline, either the deadline is extended or whatever is being negotiated goes back to where it was before. In this case, without a suspension agreement and so a return to duties. Simple as that. But instead, both sides are getting a bit nasty and that’s not going to get anyone anywhere.

What would Mexico look like without HFCS? Some might argue less obese, others might argue a more sustainable economy by consuming more of its own sugar. The fact is, it’s the American economy that would suffer without Mexican sugar. Refiners who rely on processing Mexican raws would have to negotiate a very complicated import quota system to get enough sugar to keep them operating at margins that make sense to keep the doors open.

In reality, it’s the US who is the sugar deficit market who is in the weaker position. This is even more so the case with more American consumers looking for non-GMO alternatives in an impressive backlash against GM sugarbeet (but somehow not so much against GM corn), but Americans will never, ever admit to being in a weaker position.

At least there will be something to talk about at the New York Sugar Club Dinner next week other than the weather in Brazil.

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