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Managed Trade: The U.S.-Mexico Sugar Suspension Agreements

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  • Carter, Colin Andre
  • Saitone, Tina L.
  • Schaefer, K. Aleks

Abstract

Under the 1994 North American Free Trade Agreement, Mexican sugar producers were ultimately granted free access to the US sugar market, while all other suppliers, including US refiners, were subject to supply quotas. Following a surge in imports of Mexican sugar, the American Sugar Coalition initiated anti-dumping and countervailing duty (ADCVD) proceedings against Mexico in early 2014. In December 2014, the ADCVD cases were halted as a result of two suspension agreements negotiated between the US and Mexico. This paper contributes to a small number of empirical studies that have estimated the impact of suspension agreements. We measure the impacts of the ADCVD filings and the suspension agreements on US domestic raw and refined prices, the raw-to-refined margin and the quantity and composition of sugar imports from Mexico. Results suggest US raw sugar prices increased by 3¢ per lb. (14%) under ADCVD proceedings, equivalent to an ad valorem tariff between 40% and 50%, while the suspension agreements increased US raw sugar prices by 5¢ (70% tariff equivalent). US refined sugar prices increased by similar amounts under the ADCVD proceedings and the suspension agreements (4.5¢ per lb.). Ultimately, both the ADCVD proceedings and the suspension agreements significantly reduced sugar imports from Mexico. US sugar refiner economic welfare hinges critically on the quantity and composition of raw sugar imports. As such, refiner revenue, following the ADCVD filings and suspension agreements, is estimated to have declined by 16%, relative to a free trade environment.
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Suggested Citation

  • Carter, Colin Andre & Saitone, Tina L. & Schaefer, K. Aleks, 2018. "Managed Trade: The U.S.-Mexico Sugar Suspension Agreements," 2018 Annual Meeting, August 5-7, Washington, D.C. 274270, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea18:274270
    DOI: 10.22004/ag.econ.274270
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    References listed on IDEAS

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    Cited by:

    1. Carter, Colin Andre & Schaefer, K. Aleks, 2018. "GE Labeling Laws and Segmentation of the Sugar Market," 2018 Annual Meeting, August 5-7, Washington, D.C. 273855, Agricultural and Applied Economics Association.

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    More about this item

    Keywords

    International Trade; Food and Agricultural Policy Analysis; Industrial Org./Supply Chain Management;
    All these keywords.

    JEL classification:

    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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