Term Paper on "US Mexico Sugar Dispute"

Term Paper 4 pages (1317 words) Sources: 5

[EXCERPT] . . . .

The U.S. Sugar Program, sponsored by the taxpayer, is intended to establish a guaranteed domestic sugar production level. With declining prices and the threat of U.S. industry contraction, the program was set to cost the taxpayers money for the first time since NAFTA was signed. This provided incentive for the U.S. government to take up the sugar producers' case.

Analysis

Under NAFTA, the U.S. would have needed to prove that Mexican sugar producers were dumping sugar in the U.S. market. It is possible that they were, given the conditions in the Mexican market and how fast those conditions came about. But no evidence of dumping reached the public sphere. That said, there was incentive on the U.S. side to protect the domestic market, and WTO principles allow for anti-dumping remedies if dumping is found to have occurred. Mexico apparently did not have a strong bargaining position, as it capitulated on this issue fairly easily. Read into that what you will.

Yet whatever one might think about the Mexican bargaining position, there is little doubt that the U.S. sugar industry had never accepted free trade. They had lobbied heavily against NAFTA, in particular citing the damage that competition from Mexico was going to do their industry (Wise, 1998, 103). Thus, the minute the external conditions in the industry change and the U.S. sugar industry is threatened, it was no surprise that they immediately took their case to the government. The result of this action is that now there are limits on Mexican sugar exports to the U.S., something that runs against the letter and spirit of NAFTA. Further, it effectively unwinds NAFTA for the sugar industry, something that the U.S. sugar industry wanted all along.

The sugar case illustrates how different interests come into play in international trade. U.S. sugar corporations and Mexico's cooperative producers are two major stakeholders, but their respective government are as well. The U.S. government saw that Mexican sugar was going to cost it money as per the U.S. Sugar Program, so it had a distinct interest to support its sugar producers and threaten Mexico. Whether there was any merit to the claims is not relevant, for two reasons. The first is that the legal system has no interest in right and wrong -- the outcome in this case demonstrates that the law is not necessarily used for justice. But second, the Mexican government did not have as much interest in the sugar fight as the U.S. government. The trade war that could have occurred was not in the best interests of anybody, but was worth more to Mexico than the fate of its sugar producers. Thus, the U.S. had a bigger interest, and more bargaining power. As a result, the sugar business was basically removed from NAFTA. The world of international trade is an interesting juxtaposition of business, politics and law, as this case demonstrates.

References

Brester, G. (2014). 20 years in, NAFTA finally sours the U.S. sugar program. American Enterprise Institute. Retrieved November 7, 2014 from http://www.aei.org/publication/20-years-in-nafta-finally-sours-the-us-sugar-program/

Buzzanell, P. (2010). Sugar in Mexico -- an industry overview. Sugar Beet Grower Retrieved November 7, 2014 from http://www.sugarpub.com/features/sugar-in-mexico-an-industry-overview-by-peter-buzzanell

Graham, D. & Hughes, K. (2014). U.S., Mexico sign deal to end sugar spat, avert import duties. Reuters. Retrieved November 7, 2014 from http://www.reuters.com/article/2014/10/29/us-usa-sugar-mexico-idUSKBN0II03M20141029

Wingfield, B. & Bjerga, A. (2014). U.S. To decide whether to probe Mexico for dumping sugar. Bloomberg. Retrieved November 7, 2014 from http://www.bloomberg.com/news/2014-04-18/u-s-to-decide-whether-to-probe-mexico-for-dumping-sugar.html

Wise, C. (1998). The post-NAFTA political economy: Mexico and the Western Hemisphere. Pennsylvania State University Press: University Park, PA.

WTO. (2014). Agreement on the implementation of Article VI (anti-dumping). World Trade Organization. Retrieved November 7, 2014 from http://www.wto.org/english/docs_e/legal_e/ursum_e.htm#fAgreement READ MORE

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