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Dairy Facts 2016

Sugar Producers Withdraw Request for Export Trade Certificate

Oct 14, 2008

The U.S. Department of Commerce announced last week that U.S. sugar producers had withdrawn an application that would have allowed them to manipulate the amount of sugar exported from the United States to Mexico. IDFA had argued against the producers' request for an Export Trade Certificate of Review, saying it would have "disastrous anti-competitive effects" on the integrated sugar trade that now exists between the two countries.

A Certificate of Review provides exporters with immunity from federal and state government antitrust suits with regard to the export activities specified in the certificate and important procedural advantages in private antitrust suits. If approved, the certificate would have allowed many U.S. sugar companies, under the name of the American Sugar Export Company, to determine export selling prices and quantities to be exported, while refusing to deal with companies outside the ASEC that might want to export sugar.

"Under the law, Export Trade Certificates are not supposed to affect U.S. domestic markets, but this one clearly would have done so, and we're thrilled that it has been withdrawn," said Clay Hough, IDFA senior group vice president and general counsel. "By manipulating the amount of sugar exported from the United States, the ASEC — which includes all significant sources of U.S. sugar for export — would have been able to alter U.S. supplies and therefore increase U.S. prices."

The dairy industry is the third largest user of U.S. sugar among food and beverage manufacturers, and Mexico is the number one export market for U.S. ice cream products.

Following full implementation of the North American Free Trade Agreement in January of this year, the United States and Mexico now share a common sugar market. Earlier this year, U.S. sugar growers attempted to negotiate a private-sector deal with their Mexican industry counterparts to manage trade and restrict markets. The governments of both countries, however, stepped in and rejected the deal.


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