A Canadian trade official said last week the government may be on the verge of taking the United States to a trade court over its sugar policies.
The future of Alberta’s sugar beet industry could be at stake.
The two countries have been negotiating for almost two years over the American failure to live up to its North American Free Trade Agreement to end a sugar re-export program and to give Canadian exporters a greater share of the American market.
“We are negotiating and I think we are close, but there is no guarantee we will reach agreement,” Agriculture Canada trade specialist Terry Norman said in an interview.
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“If we don’t have a deal by the end of the month, we will take them to a NAFTA panel.”
For its part, the Canadian sugar industry impatiently waits for the Canadian government to act.
“The Americans are not living up to their NAFTA obligations on sugar, and have not since Jan. 1, 1996,” said Canadian Sugar Institute president Sandra Marsden of Toronto. “We have been urging the government to take them to a panel since then.”
The stakes, she said, are several thousand Canadian jobs and the future of the sugar beet industry centred around Taber, Alta.
“Jan. 23, 1997, Rogers Sugar announced closure of (its) Winnipeg beet sugar operation,” said a memo from the sugar institute to trade minister Sergio Marchi.
“The operation was no longer viable as a result of the U.S. market access restrictions. Future U.S. market access will have a significant influence on the profitability and employment in the processing and producing sector tied to the remaining sugar beet operation in Alberta.”
Some like it
Marsden said the Canadian government has been reluctant to get tough with the Americans because of pressure from Canadian subsidiaries of American companies which like the existing arrangement.
There are two issues in the dispute – American exports of unnaturally cheap sugar-containing products into Canada and American restrictions on volumes of sugar and sugar-containing products Canadian companies can ship back.
The biggest irritant is the continued use by the U.S. of its sugar-containing products re-export program.
It allows American companies to import sugar at world prices lower than American domestic sugar prices, as long as they use the sugar to produce products which then are exported to Canada.
Under NAFTA, that program was supposed to expire Jan. 1, 1996. The Americans kept it and instead of challenging the violation, Canada decided to negotiate.
The sugar institute says 1995 imports of sugar-containing products from the U.S. carried the equivalent of 75,000 tonnes of refined sugar purchased at prices below U.S. domestic prices.
If that Canadian market share was filled by Canadian products produced from Canadian refined sugar, 7,500 jobs would have been created and demand for Canadian sugar beets would be higher.
Canadian trade officials say that since the U.S. agreed in writing to end the re-export program but did not, Canada would have a strong case before a trade panel.
The other issue is that after free trade, the Americans reduced the amount of refined sugar and sugar-containing products it would allow to be imported from Canada under quota.
Negotiations have been an attempt to convince Americans to allow more Canadian exports in return for continued American access to Canada with its cheaper products.
“So far, the Americans have not even come close to offering enough access,” Marsden said last week.
Beginning Oct. 1, the Americans set import quota levels for the next 12 months so the pressure is growing for a settlement or a challenge.
“We need to know what is happening by the end of August to help planning for the new American fiscal year,” said Norman.
“The industry thinks that is too late,” countered Marsden. “We really need to know before then if the Americans are willing to make a deal.”
