Sugar from Mexico Investigation Nos. 701-TA-513 and 731-TA-1249 (Final) Publication 4577 November 2015 U.S. International Trade Commission Washington, DC 20436 U.S. International Trade Commission COMMISSIONERS Meredith M. Broadbent, Chairman Dean A. Pinkert, Vice Chairman Irving A. Williamson David S. Johanson F. Scott Kieff Rhonda K. Schmidtlein Catherine DeFilippo Director of Operations Staff assigned Amy Sherman Investigator Joanna Bonarriva, Industry Analyst John Benedetto, Economist Tana Farrington, Economist Charles Yost, Accountant Russell Duncan, Statistician Carolyn Holmes, Statistical Assistant Courtney McNamara, Attorney Karl von Schriltz, Attorney Elizabeth Haines, Supervisory Investigator Address all communications to Secretary to the Commission United States International Trade Commission Washington, DC 20436 U.S. International Trade Commission Washington, DC 20436 www.usitc.gov Sugar from Mexico Investigation Nos. 701-TA-513 and 731-TA-1249 (Final) Publication 4577 November 2015 CONTENTS Page Determinations ............................................................................................................................... 1 Views of the Commission ............................................................................................................... 3 Additional Views of Chairman Meredith M. Broadbent ............................................................. 39 Part I: Introduction ................................................................................................................ I‐1 Background ................................................................................................................................ I‐1 Statutory criteria and organization of the report ..................................................................... I‐2 Statutory criteria ................................................................................................................... I‐2 Organization of report ........................................................................................................... I‐4 Market summary ....................................................................................................................... I‐4 Summary data and data sources ............................................................................................... I‐5 Previous and related investigations .......................................................................................... I‐5 Nature and extent of alleged subsidies and sales at LTFV ........................................................ I‐7 Nature of subsidies ................................................................................................................ I‐7 Sales at LTFV .......................................................................................................................... I‐8 The subject merchandise .......................................................................................................... I‐9 Commerce’s scope ................................................................................................................ I‐9 The product ............................................................................................................................. I‐10 Description and applications ............................................................................................... I‐10 Manufacturing processes .................................................................................................... I‐12 Tariff treatment ....................................................................................................................... I‐13 Tariff‐rate quotas on U.S. imports ....................................................................................... I‐14 U.S. sugar program .................................................................................................................. I‐19 History ................................................................................................................................. I‐19 1996‐2002 ............................................................................................................................ I‐20 2002–2008 ........................................................................................................................... I‐20 2008–Present ....................................................................................................................... I‐23 i CONTENTS Page Part I: Introduction‐‐Continued Domestic like product issues ................................................................................................... I‐26 Raw sugar and refined sugar ............................................................................................... I‐27 HFCS and sugar .................................................................................................................... I‐28 Part II: Conditions of competition in the U.S. market ............................................................ II‐1 U.S. and global market characteristics ..................................................................................... II‐1 U.S. purchasers ......................................................................................................................... II‐1 Channels of distribution ........................................................................................................... II‐2 Supply and demand considerations ......................................................................................... II‐3 U.S. supply ............................................................................................................................ II‐3 U.S. demand ......................................................................................................................... II‐9 Substitutability issues ............................................................................................................. II‐17 Lead times .......................................................................................................................... II‐17 Knowledge of country sources ........................................................................................... II‐18 Factors affecting purchasing decisions............................................................................... II‐19 Comparisons of domestic products, subject imports, and nonsubject imports ................ II‐24 Comparison of U.S.‐produced and imported sugar ........................................................... II‐25 Elasticity estimates ................................................................................................................. II‐27 U.S. supply elasticity ........................................................................................................... II‐28 U.S. demand elasticity ........................................................................................................ II‐28 Substitution elasticity ......................................................................................................... II‐28 Part III: U.S. producers’ production, shipments, and employment ....................................... III‐1 U.S. sugar beet and sugarcane growers .................................................................................. III‐2 Sugar beet growers.............................................................................................................. III‐2 Sugarcane growers .............................................................................................................. III‐2 Production of sugar beets and sugarcane ........................................................................... III‐3 U.S. sugarcane millers, cane refiners, and sugar beet processors .......................................... III‐5 ii CONTENTS Page Part III: U.S. producers’ production, shipments, and employment‐‐Continued U.S. production, capacity, and capacity utilization ................................................................. III‐9 U.S. producers’ U.S. shipments and exports ......................................................................... III‐11 U.S. producers’ inventories ................................................................................................... III‐12 U.S. producers’ imports and purchases ................................................................................ III‐12 U.S. employment, wages, and productivity .......................................................................... III‐14 Part IV: U.S. imports, apparent U.S. consumption, and market shares ................................ IV‐1 U.S. importers.......................................................................................................................... IV‐1 U.S. imports ............................................................................................................................. IV‐3 Negligibility .............................................................................................................................. IV‐8 Apparent U.S. consumption and market shares ..................................................................... IV‐8 Part V: Pricing data ............................................................................................................... V‐1 Factors affecting prices ...........................................................................................................