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October 24, 2013 - International Trade News

Canadian Sugar Institute Requests Immediate Action Against Illegally Subsidized U.S. Sugar

The Canadian Sugar Institute (CSI) has requested that the Government of Canada take immediate action against illegally subsidized U.S. sugar.

Between July and September, the United States granted illegal export subsidies to U.S. sugar producers and traders in order to remove surplus sugar from its market. The U.S. sugar market was facing a massive surplus of approximately 1 million tonnes, an amount almost equal to the size of the entire Canadian market. This surplus reflected the record breaking crops created by the U.S. sugar program and the unlimited sugar imports into the U.S. from Mexico under the NAFTA.

The export subsidies were disguised in a complicated set of transactions whereby the United States exchanged free sugar for “credits” held under the U.S. Refined Sugar Re-export Program. These exchanges effectively require the participants to export surplus sugar. The CSI estimates that, currently, approximately 300,000 metric tonnes of sugar is required to be exported within the 270 day window specified by the exchange. Canada is the likely destination for a substantial portion of this sugar.

The CSI has asked the Government of Canada to block these illegally subsidized imports and to take all necessary steps to prevent further exchanges. The Canadian Ministers of Trade and Agriculture have written their U.S. counterparts in regards to the exchanges and Canada has questioned the United States in the WTO Committee on Agriculture.

By introducing these new export subsidies, the United States is introducing an unfair trade practice which will be severely damaging to Canadian industry and jobs. Like the protectionist policy in U.S. Country of Origin Labelling (COOL), Canada is paying the price for protecting U.S. industry.

Canada must send a strong message to the United States that such actions will not be tolerated.