Sugaronline Editorial - Once upon a time in Mexico By Meghan Sapp

Published: 03/10/2017, 11:28:00 AM

When vessels are stuck in port because of a policy snafu, it means the situation is serious.



When vessels are stuck in port because of a policy snafu, it means the situation is serious.

 


No, Antonio Banderas and his fellow mariachis aren’t preparing to do battle and bring down an entire town, but the trade spat between the US and Mexico over sugar doesn’t look to be getting any better any time soon. In fact, if anything, it’s getting messier.

That’s what happens when out of the blue, export permits representing upwards of 200,000 tonnes of sugar get cancelled with no warning, leaving at least one vessel carrying up to 30,000 tonnes of sugar for the US market stranded at port, in this case in the eastern Mexican state of Quintana Roo. The cancelled permits are likely to be reissued in April, but for those with vessels loaded or loading, those delays mean major costs that can turn a sugar trade from lucrative to a loss.

The trade is wary of where that sugar will end up going if not to the US, suddenly available on the global market with need to go somewhere, anywhere, rather than waiting for new export permits in April. And that could further weigh on prices for the short term. Or maybe long term, if relations with the US sour further and that sugar needs a new home.

Next week, the Trump Administration is expected to formally notify Congress of its intent to renegotiate the North American Free Trade Agreement, the trade deal that is at the crux of US-Mexico sugar trade but goes far beyond it as well. The suspension agreement that keeps anti-dumping duties from being added to Mexican sugar imports in exchange for “self-restraint” on trade flows, the same kind of self-restraint that led to the export permit cancellation this week, is separate from NAFTA and currently under renegotiation as well.

The 20-year-old agreement could use some tweaking, trade experts say, but what it could mean for agriculture and especially for sweeteners could be significant considering the volumes of HFCS Mexico imports from the US and how much sugar can end up heading north from Mexico. But with Mexico taking a proactive stance so as not to be caught on the back foot when the US suddenly makes up his mind, perhaps even cancelling the trade deal altogether by Tweet late one night, the industry is looking for ways to remain friendly but not be at risk of being the injured party.

Thankfully for Mexico, there’s a whole lot of market to the south for many of its agricultural goods. But sugar? That’s another question all together. It too, like Africa, may have to start looking for more reliable trade partners than the one it has always had.

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