United States and Mexico Sugar Negotiations Not So Sweet

The deadline for sugar trade negotiations between the United States and Mexico was extended on Monday by Wilbur Ross the U.S. secretary of commerce by another 24 hours. Sources on both sides of the negotiations said the U.S. sugar industry added additional demands after the two governments had reached a provisional pact.

Ross said the extra time was necessary to complete the last technical consultations in the deal. What is riding on these negotiations is the possibility of stiff duties placed by the U.S. and retaliation by Mexico on imports of high-fructose corn syrup from the U.S. before wider trade negotiations that are expected to take place during August.

With an agreement a year of negotiations would end over sugar imports from Mexico. The most recent talks started during March, just two months after the inauguration of President Trump who vowed to take a tougher line to protect the trade industry and jobs in the U.S.

These talks are looked at as a precursor to more complex negotiations between the U.S., Canada and Mexico related to the North American Free Trade Agreement.

No details were provided by Ross about the issues that have yet to be resolved in the sugar negotiations.

ICE U.S. raw sugar futures for delivery in July were down 2.9% in the largest loss for one-day in the past year on Monday.

While one official in Mexico who is familiar with the ongoing talks described the discussions as implementation details of the biggest points already agreed upon, another expressed much frustration with disruptions that have taken place in the negotiations.

The official as well as two other reliable sources with knowledge of the sugar talks said the governments had reached a provisional agreement in the morning, but during the progression of the day one official started to worry over the increasing resistance from the sugar industry in the U.S. saying he believed lobbyists were making an attempt to postpone a final agreement.

The officials from Mexico and a source from the U.S. sugar industry said the U.S. industry then returned with more demands that were outside the terms that had been earlier agreed to.

Those demands included changes to a provision of first refusal right which would give Mexico the right to sell refiners in the U.S. any additional sugar necessary beyond the agreed to quotas.

The same source said that ASR Group a cane refiner that is a partnership with the Fanjul family which is politically connected has been active in raising the requirements.

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