By Adriana Barrera
MEXICO CITY (Reuters) - A tough U.S. proposal on bilateral sugar trade with Mexico sets a bad precedent for an impending renegotiation of the North American Free Trade Agreement (NAFTA), the head of Mexico's sugar chamber, Juan Cortina, said on Tuesday.
The U.S. sugar industry pressed the Commerce Department late last year to withdraw from a 2014 trade agreement that sets prices and quota for U.S. imports of Mexican sugar unless the deal could be renegotiated.
The new proposal for modifying the 2014 agreement, which seeks to increase minimum prices for refined Mexican sugar and adjust quality requirements, would essentially push Mexican exporters out of the U.S. market, said Cortina, who sits on the Mexican negotiating team.
Bilateral trade relations are under strain as U.S. President Donald Trump seeks to renegotiate the NAFTA pact with Mexico and Canada and to build a wall on the U.S.-Mexican border and have Mexico pay for it.
"This is a very bad precedent for upcoming (NAFTA) negotiations if we can't reach an agreement," said Cortina, speaking at a news conference.
Mexico and the United States last week extended a deadline to June 5 to reach an agreement on how much Mexican refined and crude sugar can enter the United States.
Mexican sugar producers will formally request the government launch an anti-dumping probe into U.S. high-fructose corn syrup, Cortina said.
The U.S. proposal seeks to sharply lower the amount of refined sugar Mexico exports to the United States, sources said earlier. The current agreement caps Mexico exports of refined sugar at 53 percent of total sugar exports to the United States; the proposal would slash that to just 15 percent. Raw sugar would make up the remainder.
Cortina said Mexican producers are open to decreasing the share of refined sugar, but not as much the new U.S. proposal is calling for.
The proposal would also seek to decrease "polarity" of Mexican sugar exports, a measure of sugar quality and its suitability for human consumption, to 99.2 percent, from 99.5 percent, said Cortina.
"The issue of polarity is non-negotiable," Cortina told Reuters after the news conference.
Refined sugar is defined as having a polarity of 99.5 percent or greater.
There is "room to talk" about minimum prices for Mexican sugar exported to the United States, Cortina said.
He added that local exporters are willing to send sugar to the United States loose in ship, rather than bagged, as refiners in the United States are requesting.