Export rules changed | United States expected to increase the amount of raw sugar it can export
The Canadian Sugar Institute is urging the federal government to challenge a U.S. decision to deal with its domestic sugar surplus by sending subsidized sugar into world markets.
Institute president Sandra Martin said the United States plans to send 200,000 tonnes of subsidized domestic sugar into the world market over the next six to nine months, some of it possibly destined for Canada.
“This is a backward step, and we are asking the government to request consultations at the WTO (World Trade Organization),” she said.
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federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
A large domestic crop in the U.S., coupled with increased imports from Mexico, means the Americans face the prospect of a large domestic sugar surplus that under law the government would have to buy and store to get it off the market and stabilize prices.
Marsden said the American government has instead decided to change the rules around what is called its “re-export credit exchange.”
Refiners have traditionally been allowed to import raw sugar for refining and then re-export on a one-to-one basis: a tonne of cane import gives the company a credit to export a tonne of refined sugar.
The U.S. now says three tonnes can be exported for every tonne imported. The other two would be from the domestic stockpile, produced with farm bill subsidies.
Meanwhile, last week Canadian sugar exporters were also being affected by the shutdown of the U.S. federal government, the result of political stalemate in Washington.
The U.S. is allowing 8,294 tonnes of global sugar imports this year, which it allots to individual countries.
Canada’s share of the quota was 28.6 percent last year, but it doesn’t know what this year’s share will be because the U.S. government em-ployees who administer the quota had been laid off due to the shutdown. The U.S. government has since reached a deal and workers have returned, but it is not known how quickly they will be able to work through the backlog and announce the quota shares.
A 12,050 quota for beet sugar is not affected.
Kathleen Sullivan, executive director of the Canadian Agri-food Trade Alliance, said Oct. 11 that agricultural exporters with unfettered access to the U.S. market have not been affected.
“In general, for those products that are traded freely between Canada and the U.S., the shutdown appears up to now to have had no significant impact on the administration, clearance and transportation of shipments to the U.S.,” she said in an email.
“This is not the case for products that are still subject to quotas and rely on quota administration, most notably sugar.”
