Export markets are critical for Canadian sugar and processed foods containing sugar. Efficient sugar production, based on world market sugar pricing, has resulted in the development of a vibrant value-added food processing sector in Canada. Canada’s sugar industry depends on food processors for 80% of sugar sales and food processors in turn depend on Canada’s local supply of high quality, competitively priced sugar.

The United States is, by far, the most important market for Canada’s sugar and sugar-containing products (SCPs) exports. Canada can supply the U.S. with high-quality SCPs, from certified production facilities on a just-in-time basis. The U.S. similarly depends on Canada as the key destination for its exports.

The majority of sugar-containing foods are freely traded between Canada and the United States with two-way trade valued at $9.9 billion in 2015, up from $1.7 billion in 1995. Based on sugar, other ingredient costs and a number of other competitive factors, both countries have enjoyed a similar rate of growth in exports to each country. Overall, Canada-U.S. trade in SCPs is complementary – producers and consumers in both countries have benefitted. (See Figure 1)

The NAFTA was implemented in 1994 and provided for gradual free trade in sugar between the United States and Mexico. In fact, Mexico achieved full duty-free access to the U.S. in 2008. Canada was excluded from the NAFTA sugar agreement so Canadian sugar exports continue to be limited to one-tenth of one percent (0.1%) of the 10.5 million tonne U.S. sugar market. Canada also faces quota limitations on a wide range of sugar-containing products while Mexico's access has been unlimited since 2003. U.S. quotas 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 of sugar and sugar-containing products.

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 10.5 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 $US 357 per tonne which is almost always prohibitive.

Canada does not produced raw cane sugar so cannot access the much larger U.S. 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. The main provisions of the U.S. sugar program date back to the 1981 Farm Bill. The program has been reauthorized with some changes in subsequent Farm Acts. Under the 2008 Farm Bill, 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. This is particularly the case for U.S. imports of refined sugar, which makes it almost impossible for Canada to increase exports to the U.S. unless there is an "emergency shortage". The 2014 Farm Bill did not change these restrictions. 

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 production) 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 production
2012 27,836 2%
2013 14,328 1%
2014 18,087 2%
2015 24,080 2%
2016 14,056 1%

Canada-U.S.-Mexico Trade in Sugar-Containing Products

U.S. imports of SCPs from Mexico and the rest of the world are growing at a much faster rate than imports from Canada. At the same time, U.S. exports of SCPs are growing at a faster rate to Canada. These factors have reduced U.S. net imports from Canada and have dramatically shifted trade in Mexico’s favour. 

A significant factor impacting the decline in Canada’s trade position relative to Mexico and other countries are the fixed quotas and outdated quota rules under that NAFTA that limit Canadian exports. SCPs having more than 10% sugar content continue to be limited by quota volumes that do not keep pace with U.S. consumption. End-use restrictions do not allow Canadian SCP exports to U.S. food processors and food service establishments, preventing any value-added in the U.S. other than addition of water by the U.S. consumer.

Two of six Canadian refined sugar operations in Canada have closed since the NAFTA was implemented in 1994. The Rogers’ beet sugar factory in Winnipeg, Manitoba was closed in 1997 after the U.S. reduced Canada’s access by imposing a small global refined sugar quota. The Lantic Sugar refinery in Saint John, New Brunswick was closed in July 2000 and production consolidated at the Montreal sugar refinery.

Canada is a reliable supplier and an orderly marketer of high quality sugar and SCPs to the U.S. Unlike Mexico, Canada does not subsidize its sugar production and its capacity limitations pose no threat to oversupply in the U.S. sugar market.  Canada’s four refined sugar operations including just one sugar beet processing operation compare to approximately 30 refined cane and beet sugar operations in the U.S. and 50 producing/exporting entities in Mexico.

The Canadian sugar industry supports modernizing the NAFTA and adopting approaches to increasing market access and improving quota rules using similar approaches as adopted in newer FTAs such as the TPP and CETA.  Meaningful TRQ increases for sugar and SCPs from Canada are essential considering the loss in U.S. market access under the NAFTA and will not in any way disrupt the U.S. sugar market. Updated quota rules for SCPs are essential to provide Canadian exporters and U.S. importers with flexibility to respond to U.S. customer and consumer needs in a dynamic marketplace.