The Canadian sugar market is a mature one, so the Canadian sugar industry relies on Canadian population growth and export opportunities for an expanded market. The United States is Canada’s most logical export market but trade in sugar and many sugar-containing products was not liberalized for Canada as part of the North American Free Trade Agreement (NAFTA). Restrictive quotas, high tariffs, and other measures have restricted Canadian sugar exports to one-tenth of one percent (0.1%) of the U.S. sugar market.

The NAFTA was implemented in 1994 and provided for gradual free trade in sugar between the United States and Mexico. In fact, Mexico has had full duty-free access to the U.S. since 2008. Canada was excluded from the NAFTA sugar agreement essentially providing for one-way free trade - the United States has free access into Canada’s sugar market while Canadian refiners continue to face restrictive quotas and high tariffs in the U.S. Quotas that were first established in the 1980s were not liberalized in the NAFTA or the WTO so will remain fixed for Canada’s sugar industry unless multilateral or significant regional negotiations result in comprehensive market access gains across all products.

U.S. Sugar Policy

Unlike Canada’s free market sugar policy, the U.S. government intervenes in its sugar market to support domestic production of cane and beet sugar. The policy artificially supports U.S. domestic sugar prices above world and Canadian price levels, restricts imports and uses a special “re-export program” to encourage exports.

The sugar program uses three tools to ensure that U.S. growers and sugar processors receive a minimum price for their sugar.

  • The U.S. Department of Agriculture (USDA) makes loans available to U.S. processors of sugarcane and sugar beets at set loan rates that support the market price above world prices
  • “Marketing allotments” are set to limit the amount of sugar that processors can sell in the U.S. market but do not limit the amount of production so the excess must be stored or exported
  • Quotas (TRQs) restrict the amount of foreign sugar allowed to enter the U.S. market.

Tariff rate quotas (TRQs) on imports of raw and refined sugar and a number of sugar-containing products continue to limit imports into the United States from all countries except Mexico. TRQs set a fixed volume of access at a low or duty-free rate but limit access above that quota with a much higher, usually prohibitive tariff.

U.S. imports of refined sugar (compared to raw sugar) are restricted by a very small TRQ of 22,000 tonnes. Canadian refined beet sugar is limited to a 10,300 tonne share of this TRQ, representing less than 0.1% of the 10 million tonne U.S. sugar market. Canadian refined beet and cane sugar can also complete with other global suppliers for a share of the small 7,090 tonne global portion of the TRQ. Any exports of Canadian sugar above these TRQs face the U.S. high tariff rate of $357 per tonne which is more than ten times the Canadian tariff.

Canada does not produced raw cane sugar so cannot access the much larger TRQ of 1,117,195 tonnes reserved for preferential raw cane suppliers. Refined cane sugar from Canada does not qualify given the U.S. restrictive “rule of origin” which only allows cane sugar from a country that produces raw sugar. A limited number of countries have also negotiated modest additional TRQs through bilateral trade negotiations (see Regional and Bilateral Trade).

U.S. imports of sugar-containing products that contain more than 10% sugar also face a number of TRQ restrictions. Examples of Canadian products that continue to be restricted include fruit flavoured beverage mixes, cocoa mixes, tea and coffee mixes, flavouring syrups, cake and cookie mixes and doughs, pancake and muffin mixes, dessert mixes and various condiments and seasonings.

U.S. sugar policy is implemented through its Farm Bill which is the main agriculture and food policy tool of the federal government. Under the 2008 Farm Bill, the U.S. sugar TRQ import restrictions were continued but with new provisions that make it more difficult for the U.S. government to increase imports at times of short supply. There are also some remaining loopholes that create great uncertainty for Canadian refined sugar when trying to access TRQ increases. Most notably, the U.S. refined sugar TRQ is not clearly defined so it is often filled with raw sugar when there are increases specified for refined sugar.

For more information on U.S. sugar policy, visit:

Canada-U.S. Trade in Refined Sugar

The United States is Canada’s logical export market for the majority of Canada’s agri-food exports. However, unlike other agri-food products, Canadian sugar exports to the United States remain at low levels (about 2% of Canadian shipments) with only very sporadic increases at times of emergency short supply in the U.S.. Such increases are unusual as was the case in 2008 and 2010 due to hurricane damage as well as a refinery explosion.

Canada Exports of Refined Sugar to the United States

Year Tonnes % Canadian shipments
2008 71,561 6%
2009 15,848 1%
2010 70,467 6%
2011 49,796 4%
2012 27,836 2%