According to a Reuters’ exclusive, a dispute over the pace of shipments has caused Mexico to cancel existing sugar export permits to the United States, which could temporarily disrupt supplies.
This dispute is the latest in an ongoing trade conflict between Mexico and the U.S. and centers on an interpretation of how the Mexican government issues export licenses to make sure supplies entering the United States do so at a regulated pace.
In a letter sent by Mexico’s sugar chamber mills on Mar. 6, Mexico cited unfilled positions at the U.S. Department of Commerce as part of the issue. These open positions have left Mexican officials without U.S. counterparts to negotiate “legalistic” interpretation of the rules.
The letter called the interpretation by “low-level” U.S. Commerce Department officials “absurd.”
Juan Dias Mazadiego, director of foreign trade at Mexico’s Economy Ministry, said the move to “suspend” permits was to comply with accords with the United States because Mexico had already reached its export limit for the six months up to Mar. 31.
Mazadiego told Reuters the suspension affected 54 permits from 23 mills, but did not specify the amount of sugar this included.
Mexico is the United States’ top foreign supplier of sugar. U.S. sugar prices have soared since late 2016 after the U.S. sugar industry urged the Commerce Department to withdraw from a 2014 trade agreement that set quota and prices for U.S. imports of sugar from Mexico.
After a trade investigation, Washington said the 2014 deal may not have been working as intended and called for its suspension until it could be renegotiated.
The day after the license cancellation, the U.S. domestic raw sugar contract on ICE Futures U.S. settled at the highest price in nearly five years.
President of the Sweetener Users Association trade group, Richard Pasco said the cancellation adds to continued marketplace uncertainty.
“We need adequate supplies and the lack of resolution is a problem.”
The Mar. 6 letter said existing permits would be reissued in April. However, officials from Mexico’s sugar chamber declined to comment. A spokesman for the U.S. Department of Commerce has yet to respond to a request for comment.
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