WALL STREET JOURNAL: Trump’s New Sugar High

Wall Street Journal: June 12, 2017.

The Trump Administration last week announced a new agreement with Mexico to guarantee that sugar prices in both countries will remain well above the world market price. Commerce Secretary Wilbur Ross framed the deal as a big win—and it is, for the few sugar producers on both sides of the border. The losers are millions of consumers.

No industry has enjoyed as much protection under the North American Free Trade Agreement (Nafta) as sugar producers and refiners. Mexico raised its sugar import tariffs from third countries in 1994 to match U.S. protection levels and thereby form a customs union. While most of the U.S. economy had to adapt to competition from Canada and Mexico starting in 1994, the U.S. market remained heavily protected from Mexican sugar until 2008.

Even when the market opened, U.S. sugar interests refused to adapt and filed antidumping and countervailing duty suits against Mexican exports. In 2014 the Commerce Department ruled in their favor. Mexico could have fought that ruling at a Nafta arbitration panel but its sugar lobby also likes high prices.

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