Text of U.S., Mexican Sugar Industry Deal
January 18, 2008
RECOMMENDATIONS TO THE US GOVERNMENT AND THE MEXICAN GOVERNMENT FOR A US-MEXICO GOVERNMENT AGREEMENT TO COORDINATE SUGAR POLICIES UNDER NAFTA
These recommendations are designed to achieve the objectives of NAFTA for the sugar sector: a predictable commercial framework for business planning and investment, new employment opportunities, and a framework furthering bilateral cooperation to enhance and expand the benefits of NAFTA.
1. Data Collection.
The U.S. and Mexican Governments shall establish a system for the timely collection and publication of reliable data on stocks, production, imports, exports and deliveries of sugar and high fructose corn syrup in the U.S. and Mexican markets.
2. IMMEX/Re-Export Programs.
- (a) The U.S. Government shall modify its Re-Export Program and the Mexican Government shall modify its IMMEX Program to apply only to goods re-exported outside of Mexico and the United States.
- (b) To ensure orderly transition in the IMMEX and Re-export markets, the U.S. and Mexican governments shall not apply the modifications of the programs to re-exports made under contracts entered into before the effective date of the U.S.-Mexico Government Agreement until 180 calendar days after such date.
3. Third Country Imports.
- (a) The U.S. Government shall increase the tariff-rate quotas for raw cane sugar and for refined and specialty sugars above the WTO minimum quantities only if the U.S. Secretary of Agriculture determines there is a shortage in the U.S. market. For purposes of this subsection, a shortage exists when the sum of (i) production of sugar in the United States, (ii) the minimum quantity of imports of sugar required under trade agreement obligations, and (iii) imports from Mexico, is less than consumption of sugar in the United States. In determining whether additional sugar is needed, the U.S. and Mexican Governments shall consult in the Joint Mexico-U.S. Sugar Commission and take into consideration reasonable beginning and ending inventories.
- (b) The Mexican Government may establish import quotas for sugar for human consumption in Mexico up to the amount of a shortage in Mexico only if the Government of Mexico determines there is a shortage in the Mexican market. For purposes of this subsection, a shortage exists when the sum of (i) the production of sugar in Mexico and (ii) imports from the United States, is less than human consumption of sugar in Mexico. In determining whether additional sugar is needed, the U.S. and Mexican Governments shall consult in the Joint Mexico-U.S. Sugar Commission and take into consideration reasonable beginning and ending inventories.
- (c) If the Mexican Government determines there is a shortage of sugar in the Mexican market for the production of ethanol for consumption in Mexico, then the Mexican Government may establish import quotas for third-country sugar for the program to produce ethanol for consumption in Mexico up to the amount of that shortage. Sugar imported under such quotas that is not used in the ethanol program may not be sold in Mexico for human consumption and may not be substituted for sugar exported to the United States. For purposes of this subsection, a shortage exists when the minimum quantity of sugar required for the ethanol program exceeds the difference if any between —
- (i) the sum of human consumption of sugar in Mexico plus exports to the United States under section 4 (b)(i), if any, minus
- (ii) the sum of production of sugar in Mexico plus imports from the United States under section 3 (b), if any.
- (d) The U.S. and Mexican Governments shall cooperate to keep imports of non-U.S. and non-Mexican origin sugar into the United States and Mexico to the minimum amounts required by their respective international obligations, unless additional sugar is needed to meet demand in the combined U.S. and Mexican market.
4. Coordination of Sugar Policies under NAFTA to Promote Regional Market.
- (a) The United States shall modify its inventory management system to—
- (i) deduct exports to Mexico (whether blocked stock or allotment sugar) from marketing allotments; and
- (ii) increase the overall allotment quantity (OAQ) with new allocations solely for exports to Mexico if necessary to cover a shortage in Mexican production.
- (b) The Mexican Government shall modify its policies —
- (i) so that exports to the U.S. can be up to 70% of the quantity of sugar displaced in the Mexican market by HFCS in excess of 700,000 metric tons, raw value ("new displaced sugar") each year in crop years 2008 and 2009 and up to 60% of the quantity of new displaced sugar in crop years after 2009, or 300,000 metric tons, whichever is greater (exports under this paragraph may be increased to fill a shortage under section 3(a) and shall be reduced by the quantity of import quotas established under section 3(b));
- (ii) to retain in the Mexican market, or export to third countries, any surplus sugar available in Mexico because of increased production, decreased consumption, or imports from third countries; and
- (iii) notwithstanding paragraph (i), to permit increased exports to the United States equal to the amount of imports from the United States (excluding imports from the United States to cover a shortage in Mexico under sections 3(b) or (c)).
- (c) U.S. and Mexican import and export data will be updated monthly and balances will carry over at the end of the fiscal year, if necessary, to accommodate fourth quarter activity.
5. Joint Mexico-United States Sugar Commission.
- (a) A permanent Joint Mexico-United States Sugar Commission shall be established to monitor the implementation of the U.S.-Mexico Government Agreement envisioned by these recommendations.
- (b) The Commission’s members shall include cabinet-level officials.
- (c) The Commission shall have a private sector advisory committee drawn from the U.S. and Mexican sugar industries.
If either government does not implement these recommendations, or stops implementing these recommendations, then the other government shall revert to the sugar policies it had in effect before it implemented the recommendations.
7. Dispute Settlement.
- (a) All disputes under the U.S.-Mexico Government Agreement shall be referred to the Joint Mexico-United States Sugar Commission for resolution.
- (b) If the Joint Mexico-United States Sugar Commission has not resolved the dispute within 30 days after receipt of a complaint, the matter shall be referred to a dispute settlement panel under NAFTA Article 2008.
- (c) If a matter is referred to a dispute settlement panel under NAFTA Article 2008, the complaining government shall, pursuant to Section 6, suspend its implementation of recommendations 2, 3 and 4 and revert to the sugar policies it had in effect before it implemented these recommendations.
Either government may withdraw from the U.S.-Mexico Government Agreement six months after it provides written notice of withdrawal to the other government.
The Joint-Mexico-United States Sugar Commission shall review the operation of the U.S.-Mexico Government Agreement five years after the Agreement enters into force and may recommend changes in, or termination of, the Agreement to both Governments.