GLOBAL ECONOMY

Mexico cancels sugar export permits to the US in dispute over shipment pace

Workers sit next to bags containing sugar at the San Francisco Ameca sugar factory in the town of Ameca, Jalisco.

Workers sit next to bags containing sugar at the San Francisco Ameca sugar factory in the town of Ameca, Jalisco.  (Reuters)

Mexico has canceled existing sugar export permits to the United States to avoid penalties in a dispute over the pace of shipments, a document seen by Reuters said, partly blaming the issue on unfilled positions at the U.S. Department of Commerce.

It was not immediately clear what impact the cancellation would have on exports to the United States. The document, sent by Mexico's sugar chamber to mills on Monday, said existing permits would be reissued in April.

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Mexico's sugar mills are currently in full swing at the height of the harvest. The amount of sugar sent to the United States varies from season to season, with the document referring to a quota of 820,000 tonnes in 2016/2017.

Ties between the United States and Mexico have frayed under Donald Trump, who sees trade skewed to favor the southern neighbor and is seeking to renegotiate the North American Free Trade agreement.

The document made no suggestion that the present dispute was related to the wider politics, but described as "absurd" an interpretation by "low-level" Commerce Department officials of a clause in so-called suspension agreements, which have regulated the sugar trade between both countries since the end of 2014.

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In the document, Chamber president Humberto Jasso says the interpretation relating to how much sugar Mexico can send in the six months up to March 31 means it would only be able to export 40 percent of the quota allocated by the United States in the period, causing a concentration in the second half of the season.

The Economy Ministry said it could not immediately comment. Officials from Mexico's sugar chamber could not be reached for comment. It was not immediately clear how many sugar export permits were canceled or what penalties Mexico had faced.

The Mexican Economy Ministry decided to cancel the permits since it has no counterparts at the Commerce Department to resolve the issue, the document said.

"Because the Ministry cannot resolve the issue with the DOC, since officials in charge of making decisions have not been appointed, Economy Ministry attorneys in Washington insisted on sending a statement to the DOC acknowledging the problem and canceling existing exports, so that they can be re-issued as of April 1," the document adds.

Mill owners should consider legally challenging the decision, it said.

Trump has not filled staff positions in several departments, a situation Mexican officials say has made it hard to negotiate on trade issues.