Napa, Calif., Aug 7 - Free trade in sweeteners between the United States and Mexico will kick off in 2008, but some problems may plague the smooth implementation of the deal, industry sources said Tuesday.
Under the terms of the North American Free Trade Agreement (NAFTA), restrictions on sweetener trade between the two neighbors are supposed to be eliminated from Jan. 1 of next year.
James Horvath, chief executive officer for American Crystal Sugar Co. in Moorhead, Minnesota, told delegates of the industry group American Sugar Alliance a top issue would be the displacement of sugar in the Mexican soft drinks industry by the sweetener high fructose corn syrup (HFCS).
"Economics will ultimately prevail and (we) see a conversion to HFCS," he said, adding it may be necessary for the two governments to get together on implementing a compromise "to manage the situation."
Juan Cortina Gallardo, president of the Mexican Chamber of Sugar and Alcohol Industries, told the same forum in Napa, California that a permanent survey of exports and imports of both sugar and HFCS would be needed.
"The end-goal has to be a permanently balanced market," he said.
The director of trading of Sucden Americas Corp., Francois Nehama, said the HFCS issue will be a major variable in a common regional sweetener market.
He said the flow of Mexican sugar exports to the United States will continue to increase in the future mainly because U.S. price supports for sugar "will attract ongoing Mexican production growth."
Nehama added that U.S. loan supports would also act as "a de facto price to NAFTA surplus sugar."
To prepare for the advent of free trade in sweetener, the executive vice-president of Florida Crystals Corp, Donald Carson, said they have formed an export trading firm that can be used by all sugar producers in the U.S. to export sugar to Mexico.