NAFTA AGRICULTURE FACT SHEET:
Sugar

TREATMENT OF TARIFFS:

• U.S. and Mexican tariffs on sugar are being phased out in conjunction with the treatment of U.S. and Mexican border protection on sugar. At the end of year 15 of the agreement, there will be free trade in sugar between Mexico and the United States.
• Between years 1 and 15, Mexico's allowable duty-free sugar exports to the United States, and U.S. duty-free exports to Mexico, will be the greater of: 7,258 metric tons; the quantity allocated by the United States under the current sugar program to "other specified countries and areas"; or the quantity allowed under the definition of "net surplus producer," as described below.
• In any year that Mexico or the United States reaches net surplus producer status (production exceeding consumption) during the initial 6-year period, duty-free access will be provided by the other country for the net production surplus, up to 25,000 tons.
• Beginning in year 7, and for the remaining 8 years of the transition period for sugar, Mexico will be allowed to ship duty-free to the United States its net production surplus, up to a maximum of 250,000 tons. U.S. duty-free access to the Mexican market will, in turn, be determined by the U.S. net production surplus, also with a cap of 250,000 tons.
• The calculation of net production surplus for Mexico and the United States will be carried out on an annual basis. For the purposes of this calculation, consumption of high fructose corn syrup will be included with consumption of sugar for both countries.
• During agreement years 1-6, the United States will reduce its over-quota tariff on sugar imports by 15 percent.
• Mexico will align its tariff regime with that of the United States by the end of year 6 of the agreement, implementing a TRQ with rates equal to those of the United States. During years 7-15, the remaining U.S. and Mexican tariffs on bilateral sugar trade will be reduced on a straight-line basis to zero.
• The U.S. refined sugar re-export program will remain in place for exports to Mexico. U.S. shipments under the program will receive Mexico's MFN tariff rate, as opposed to the NAFTA preferential rate.
• The United States and Mexico will each allow duty-free access to imports of: raw sugar that will be refined in importing country and then re-exported to the original exporting country; and refined sugar that has been refined from raw sugar produced in and exported from the other country.
• Under the NAFTA, Mexico and Canada retained their tariffs on bilateral sugar trade.

RULES OF ORIGIN:

• Refined sugar or molasses made from raw sugar imported from non-NAFTA countries does not qualify for NAFTA preferences. In order to originate, all processing of sugarcane or sugar beets must take place in NAFTA territory. The unprocessed cane or beets may be imported, but they must be processed or refined in NAFTA territory. The de minimis provision does not apply to sugar. To qualify for NAFTA preference, 100 percent of the sugar must be NAFTA in origin.

U.S.-Sugar Trade with Mexico

Value in $1,000; volume in metric tons.

Last modified: Friday, November 18, 2005