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Sugar Industry and International Trade News 2005 | 2004 | 2002 | 2001 | 2000 | 1999 | 1998
US Bill Threatens New Import Restrictions on Sugar-Containing Products On December 4, the US Senate Finance Committee adopted an amendment to the Trade Adjustment Assistance Act, sponsored by Senators Breaux and Thomas. The amendment would require the US Department of Agriculture to identify imports of products considered (by the USDA) to be circumventing the US tariff-rate quotas (TRQ's) on sugar, syrups or sugar containing products. The USDA would then report to the President who in turn would be required to include any products identified by USDA in the appropriate TRQ. The bill is very vague about what might be considered "circumvention" and as a result, would give the USDA and the President broad new powers to restrict imports. The vague language in the amendment would offer new powers to move virtually any sugar containing product into the tariff rate quotas to restrict its access to the US. The amendment is reported to be a response to widespread circumvention of US import controls on sugar and sugar-containing products by products like the so-called "stuffed molasses." However, stuffed molasses imports have already been stopped by existing US laws and it was the only known instance where a product significantly challenged the rigid US import controls. The US Courts upheld a US Customs Service retraction of their original ruling on stuffed molasses and allowed the reclassification of such imports using their existing regulatory tools. In spite of this, the Breaux-Thomas amendment appears to be taking the opportunity provided by the stuffed molasses case to create something of a "phantom menace" in order to further expand US restrictions on imports of products containing sugar. It could potentially affect sugar and all new and existing sugar containing products imported into the US. The amendment also provides a new mechanism for the reclassification of any sugar related product by moving decisions on "circumvention"away from the technical decision makers in US Customs and the USITC to the more politically influenced USDA. It goes against the policy and law now governing how import relief is determined. Those laws and procedures were developed in accordance with international rules and agreements. It is likely that US trading partners will object to this new procedure for the impact it will have on their access commitments. If products actually were reclassified or added to TRQ's as a result of these provisions, the action would clearly violate US international commitments and bindings. The US has made certain access commitments and received certain commitments in return. Also, with respect to Canada and Mexico, there are bilateral commitments to consider. To have a political agency cut back access, either by adding products to the TRQ or by reclassifying products currently not subject to a TRQ into those TRQ categories, would run counter to the letter and intent of US obligations. Even when these actions are taken by US Customs through their detailed procedures and regulations, the possibility of affecting bindings is very real. To have this procedure put in the political realm would not be acceptable to US trading partners. The US has been trying for many years to eradicate this type of arbitrary action in various WTO/GATT and bilateral fora. It would be a big step backward, particularly after the tariffication process basically did away with the similar Section 22 restraints, which was an important concession the US made to achieve important progress toward liberalizing agriculture trade in the last round of the WTO. Unravelling such commitments now would not help to ensure the success of future negotiations.
Doha WTO Declaration Viewed as Positive for Sugar On November 14, a new round of multilateral trade negotiations was launched in Doha Qatar. The Doha Ministerial declaration elaborated on the objectives and timetable for the current negotiations on agriculture and services and brought them under a broader, comprehensive work program. The overall conduct of the negotiations will be supervised by the Trade Negotiations Committee which will hold its first meeting no later than January 31, 2002. Negotiations under this Round are to end no later than January 1, 2005. Ministers committed to comprehensive negotiations aimed at: "substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support." The fact that ministers agreed to the "phasing out" of agricultural export subsidies is of particular interest to world sugar producers. Export subsidies on refined sugar, primarily from the European Union, depress world prices and have a destructive impact on the incomes of world market producers who operate without government support. They also make it impossible for Canada to compete in other countries against the huge surpluses of subsidized EU sugar. Another critical factor for commodities such as sugar, is that the negotiations will be treated as a single undertaking. This should help provide the leverage necessary to get countries like the US and the EU to move on sensitive commodities such as sugar. The future of the Canadian industry depends on gaining substantially improved access to export markets, particularly the US. This can only be achieved through a comprehensive and multilateral process. Canada-Costa Rica Implementation Act Passed and New Talks with Central American Countries Set to Begin The Canada-Costa Rica Free Trade Agreement Implementation Act (Bill C-32) was passed in early November paving the way for the FTA to begin on January 1, 2002. The sugar provisions take effect January 1, 2003. Under the sugar provisions, Canada will have duty-free access for 3,528 tonnes of sugar, increasing to 6,990 tonnes by 2010. Costa Rica will have duty-free access for 20,000 tonnes, rising to 40,000 in 2010. Canadian sugar refiners and sugar producers objected to this unequal treatment and expressed strong concerns that this could set a negative precedent for other trade negotiations in the region, such as the CA-4 (four Central American countries - Guatemala, El Salvador, Honduras and Nicaragua). Canada's National Sugar Caucus, including numerous MP's in BC, Alberta, Ontario, Quebec and New Brunswick echoed the concerns of the industry. While Bill C-32 passed, the Parliamentary Sub-committee on International Trade highlighted the specific concerns of the Canadian sugar industry and asked that these concerns be taken into account in future trade negotiations. Given the negative precedent set in the Costa Rica agreement and the much bigger threat posed by CA-4 countries (see graph), the Canadian sugar industry had sought to exclude sugar from the CA-4. Such agreements will divert more refined sugar trade to Canada without providing Canada with any meaningful export outlets to help offset the impact on the Canadian market. The US and other markets restrict imports of refined sugar with prohibitive tariffs and small quotas. For Canada to secure improved export opportunities in any free trade negotiations, the US and the EU must be fully engaged. Initial discussions with the CA-4 are set to begin in mid-December in El Salvador. According to officials, the negotiating mandate does not exclude any commodities at the outset. Canadian sugar producers and refiners will continue to urge officials to take a tough stand on sugar recognizing the significant threat to investment and jobs. CA-4 Sugar Production (thousand tonnes)
MPs Seek Assurances that Costa Rica Sugar Provisions will Never be Repeated —Solberg Defends Sugar Beet Producers on Canada Costa Rica Free Trade Deal Ottawa - Medicine Hat M.P. Monte Solberg, spoke out yesterday on behalf of the concerns of local Taber sugar beet producers during committee hearings on Bill C-32, an Act to implement the Free Trade Agreement between Canada and Costa Rica. Also appearing before the committee was Bruce Webster, General Manager of the Alberta Sugar Beet Growers. The treatment of sugar under the deal has been a sensitive area of concern for the Canadian sugar industry as the agreement offers little export opportunities for Canadian sugar producers and a similar deal with Central American countries has the potential to disrupt the western Canada sugar market. In practical terms the sugar pact will allow Costa Rica to export up to 40 000 metric tonnes of sugar into Canada while Canada will be given access to Costa Rica for up to 7000 metric tonnes. Canada currently has an open sugar market with an 8% tariff on refined sugar while Costa Rica applies a 50% tariff. U.S. and Latin American tariffs on sugar range from 50% to 160% providing a significant hurdle for Canadian sugar exporters. Worried that the sugar deal signed with Costa Rica would become a template for upcoming negotiations with the Central America sugar exporting countries of Guatemala, Honduras, Nicaragua and El Salvador, Mr. Solberg sought government assurances that that would not be the case. "Canadian sugar exporters face competition from countries with high tariffs and restrictive quotas, in fact since this government has been in power sugar access to the U.S. has decreased from 55 000 tonnes to 15, 000 tonnes," stated Solberg. The Taber area M.P.is an advocate of free trade as long as the rules are fair. "Time and again sugar has been traded away by this government to protect other interests," continued Solberg. Further to interventions by Mr. Solberg and his Canadian Alliance colleagues, the government members on the committee have agreed to stipulate in its report on the Bill to the House of Commons that the sugar deal with Costa Rica will not be a precedent for future trade negotiations with Central America. -30- For more information, please contact:
Fair Trade For Canadian Sugar Depends On WTO Trade Liberalization A study released last week by Agriculture & Agri-Food Canada supports the Canadian sugar industry view that regional trade negotiations with Central America pose a substantial threat to the future of Canada's sugar industry. The report by Landell Mills Commodities (LMC), an internationally recognized firm specialized in sugar trade analysis, was commissioned by the Agriculture department to evaluate the impact of removing Canada's refined sugar tariff for four Central American countries - Guatemala, Honduras, El Salvador and Nicaragua (the "CA-4). LMC concluded that, "The elimination of the tariff on refined sugar imports from CA-4 countries would greatly enhance these countries competitiveness in the Canadian market. The cost of this to domestic producers would exceed C$30 million in the short/medium term [1-2 years]". They indicated that "certain Canadian producers could compete with [the] imported sugar on a cash cost basis," however "no industry is able to operate on this basis in the long term." "The study acknowledges that Canada's sugar market is already the most open in the world", commented Sandra Marsden, President of the Canadian Sugar Institute. "Unlike the United States, Europe and most other developed economies, our industry does not depend on any domestic or export subsidies or other trade distorting policies. Sugar refining is a value-added industry that provides Canadian consumers and food processors with sugar prices among the lowest in the world. Our modest (about 6-8%) tariff is important until the big players, including the US and EU, reform their sugar policies that distort global trade for all other countries including Canada and Central America." "The results support the long standing Canadian sugar industry position that trade liberalization in sugar depends on global (WTO) liberalization not a series of regional trade deals", observed Sandra Marsden, President of the Canadian Sugar Institute. "Regional and bilateral trade deals will divert more refined sugar trade to Canada because the US and other major markets maintain strict import barriers and the world market price is depressed by European export subsidies." The LMC study confirmed that a regional trade deal with the CA-4 would make Canada the most attractive export market for these countries. Countries such as Guatemala have very large, sophisticated sugar industries and the potential to disrupt the entire Western Canada market and the retail sugar segment on which the industry depends for its viability. The Canadian industry is urging the Government of Canada to exclude sugar from such regional negotiations to prevent further job losses and refinery closures in Canada. The industry opposed the sugar deal with Costa Rica because of worries about the precedent that it would set for upcoming negotiations with Central America. The industry has closed two plants since 1997 reflecting the competitiveness in the Canadian market and limited export opportunities. The industry has been forced to be efficient and globally competitive. Import competition from Central America and other countries in the hemisphere has grown dramatically in recent years, even with Canada's small tariff. If new regional trade deals lead to the removal of Canada's refined sugar tariff in advance of WTO trade liberalization, the Canadian sugar industry may not survive to benefit from any meaningful export opportunities.
Pierre Coté Joins Lantic Sugar as President and CEO MONTREAL, QUEBEC - September 24, 2001 – Lantic Sugar Limited announced today that Mr. Pierre G. Côté is joining the company, effective October 1, 2001, as its President and Chief Executive Officer. In accordance with Lantic’s management agreement with Rogers Sugar Ltd., Mr. Côté will also be President and Chief Executive Officer of Rogers Sugar Ltd. Prior to this appointment, Mr. Côté was Senior Vice President of Abitibi Consolidated. During his 19-year career, Mr. Côté has advanced rapidly through a variety of operating and executive positions at Abitibi Consolidated, Donohue and Stone Consolidated. “Pierre’s strong operating focus and processing industry background will ensure that Lantic and Rogers Sugar remain amongst the most efficient sugar producers in North America” said, Seth M. Mersky, Vice President of Onex Corporation and a Lantic Director. Lantic is a majority owned subsidiary of Onex Corporation. Mr. Côté is a 1982 graduate of Laval University with a degree in mechanical engineering. He resides in Longueuil, Quebec with his wife and two children. Lantic Sugar operates a cane sugar refinery in Montreal, Quebec and markets its products primarily in eastern Canada. Rogers Sugar operates a cane sugar refinery in Vancouver, British Columbia and a beet sugar operation in Taber, Alberta. Rogers Sugar is a market leader of sugar products in western Canada.
The Way Forward An International Agri-Food Trade Conference
The Canadian Agri-Food Trade Alliance (CAFTA) is hosting an International Trade Conference, "The Way Forward", at the Executive Royal Inn in Calgary on Friday October 19, 2001. Trade Ministers from WTO member countries will soon be meeting in Doha, Qatar. Hopes are that the Ministers will launch a more comprehensive round of world trade negotiations. In the meantime, agriculture negotiations have entered their second year. Negotiators from WTO countries are discussing, debating and analyzing more than 40 negotiating proposals as they work towards a new agreement to govern international agricultural trade. Canada has played a leading role in the agriculture negotiations. Our country was among the first to submit a negotiating position, and has submitted proposals on each of the major issues: market access, export competition and domestic support. "The Way Forward" will give participants the opportunity to hear from and dialogue with Canada's Chief Agricultural Negotiator, Suzanne Vinet. The keynote speaker is Carmel Cahill of the Agriculture, Food and Fisheries Directorate, Organization for Economic Cooperation and Development (OECD), Paris. Other speakers include Alberta's Minister of Agriculture, Food and Rural Development, Shirley McLellan; a panel of international representatives; and a comprehensive panel of Canadian industry representatives. The Canadian sugar industry perspective on sugar and sugar containing products trade will be included on the panel. The industry supports the WTO as the only reasonable prospect of liberalizing global sugar trade and providing meaningful export opportunities for Canadian sugar producers, processors and refiners. For more information on the conference visit the CAFTA website, or call CAFTA at (613) 560-0500. The Canadian Agri-Food Trade Alliance (CAFTA) is national coalition of associations, organizations and companies representing producers and processors, that advocates the liberalization of agri-food markets.
Canada Willing to Sacrifice Sugar in Asymmetrical Trade Deals Canada is engaged in a series of trade talks that include Costa Rica, four other Central American countries (the "CA-4") as well as the Free Trade Area of the Americas (FTAA). A common feature in most of these negotiations is that the other parties want improved sugar access to Canada without offering symmetrical improvements in access to their highly protected sugar markets. The recently announced Canada-Costa agreement is a case in point. Costa Rica has a 50% tariff compared to Canada's 8% tariff, and supports its sugar production through high prices that are far above the Canadian and even the supported US price. Yet, Costa Rica is demanding approximately six times more duty free access than it is willing to give Canada during a transition period. Further, it will only grant access for a token amount of Canadian refined cane sugar (which makes up 90% of Canada's sugar production) and even that depends on Costa Rican sales to Canada. In spite of objections from the industry that this is both a bad deal and would set a dangerous precedent for the CA-4 talks (countries whose combined exports are 1.5 times greater than Canada's total production) and the FTAA, the government seems willing to accept these lop-sided terms. Canada already has one the most open sugar markets in the world and should not feel pressured into making further concessions while other countries continue to intervene in their own markets and transfer those distortions to the Canadian market. Another problem is that bilateral and regional deals do not address the massive distortions in the world market caused by EU export subsidies and US import restrictions. As a result, they only increase Canada's exposure to these distortions leading to the eventual loss of jobs in Canada. Sugar is a multilateral (WTO) issue that can only be successfully dealt with when all the players are engaged. US "Stuffed Molasses" Bill Returns On April 6, US Senator John Breaux re-introduced his bill to stop imports of certain sugar syrups, known as stuffed molasses, into the US. The new bill attempts to stop the imports by amending the US tariff schedule to place the product under quota. Stuffed molasses is a mixture of raw sugar and molasses not covered under the extensive US sugar quota system. USDA estimates that 118,000 tons entered the 10 million ton US sweetener market in 2000. It has been blamed by some for depressing US sugar prices (although the volumes are small relative to the large increase in US domestic sugar production in recent years). While stuffed molasses ingredients are mixed in Canada and shipped to the US, it is not made from Canadian refined sugar. The concern for Canada is that the broad language contained in the bill could be used in the future to block imports of any sugar containing product the US does not like. There is also concern about the consequences of countries amending their tariff schedules on an ad hoc basis. OECD Gives WTO Agreement Mixed Reviews A new report from the OECD, Agricultural Policies in OECD Countries, Monitoring and Evaluation, 2000, says, "The impact on trade in agricultural products of the Uruguay Round Agreement on Agriculture (URAA) has been limited." However, they add that the WTO agriculture negotiations are an excellent opportunity to deepen the process of agricultural trade liberalization. The OECD says the URAA helped bring agriculture into the multilateral trading system, but the trend in reform came to a halt in 1998, and many distortions remain. Some countries raised tariffs. Others made greater use of export subsidies and other policies to encourage the disposal of domestic supplies in foreign markets, further distorting trade. It notes that while some bilateral agreements were completed, they covered only a limited number of commodities. As well, levels of producer support still vary widely across commodities with rice, milk and sugar having the highest support. Support went up in 1999 with the highest increase in support for sugar (up 10%). Canada has no support for sugar, but nearly all its trading partners do. "The developments of the past few years underline the importance of new (WTO) negotiations," according to the OECD. This report and others are available http://www.oecd.org/agr/.
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