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Managed trade: The US–Mexico sugar suspension agreements

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  • Colin A. Carter
  • Tina L. Saitone
  • K. Aleks Schaefer

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. Commerce administré : les accords de suspension relatifs au sucre entre les États‐Unis et le Mexique. En vertu de l'Accord de libre‐échange nord‐américain de 1994, les producteurs de sucre mexicains obtinrent l'accès libre au marché sucrier des États‐Unis, alors que dans le même temps, les autres fournisseurs, y compris les raffineurs américains, furent soumis à des contingentements de l'offre. En raison de l'augmentation des importations de sucre mexicain, l'American Sugar Coalition initia, dès le début de l'année 2014, des poursuites relatives aux droits antidumping et compensateurs contre le Mexique. En décembre 2014, ces procédures furent interrompues avec la signature d'accords de suspension négociés entre les deux pays. Cet article apporte une contribution à un petit nombre d'études empiriques qui ont étudié l'incidence de ces accords de suspension. Nous avons mesuré les conséquences de ces plaintes relatives aux droits antidumping et compensateurs ainsi que des accords de suspension sur les prix du sucre brut et raffiné sur le marché intérieur, la marge de brut à raffiné ainsi que sur la quantité et la composition des importations de sucre mexicain. Les résultats suggèrent qu'au cours des poursuites relatives aux droits antidumping et compensateurs, les prix du sucre brut aux États‐Unis augmentèrent de 3¢ par livre (14 %) équivalents à des droits de douane ad valorem de 40 à 50 %, tandis que les accords de suspension augmentèrent les prix du sucre brut de 5¢ (en équivalent tarifaire). Les prix du sucre raffiné aux États‐Unis augmentèrent dans des proportions similaires, que ce soit lors des procédures relatives aux droits antidumping et compensateurs ou lors des accords de suspension (4,5¢ par livre). Conséquemment, les deux procédures réduisirent de façon drastique les importations de sucre en provenance du Mexique. La santé économique des raffineurs reposant en grande partie sur la quantité et la composition des importations de sucre brut, on estime qu'au cours des poursuites relatives aux droits antidumping et compensateurs ainsi que lors des accords de suspension, les revenus des raffineurs diminuèrent de 16 % dans cet environnement de libre‐échange.

Suggested Citation

  • Colin A. Carter & Tina L. Saitone & K. Aleks Schaefer, 2019. "Managed trade: The US–Mexico sugar suspension agreements," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(3), pages 1195-1222, August.
  • Handle: RePEc:wly:canjec:v:52:y:2019:i:3:p:1195-1222
    DOI: 10.1111/caje.12393
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    JEL classification:

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

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