In Costa Rica, sugar producers are asking the government to raise tariffs or entry taxes on imports, and importers are opposing, as this would raise the final price to the consumer.
Tuesday, January 21, 2020
In July 2019, the Sugar Cane Industrial Agricultural League (LAICA) asked the Ministry of Economy, Industry and Commerce (MEIC) to launch an investigation with the aim of imposing additional tariffs on imported sugar, arguing that purchases from abroad would damage local production.
The importers are against it, since according to them there is no threat, because they estimate that the sugar bought abroad represents less than 10% of local consumption.
As part of the investigation process, the public hearing between interested parties was held on January 20.
At the hearing, Lucrecia Brenes, legal advisor to the importers said "... What we have had is a presentation on whether it is convenient to apply a new tax to the import of sugar, hence it is important to remember that imports already maintain a high tax burden, since a 45% tariff is paid, plus a 1% tax and, additionally, an antidumping measure of 3.67% was set. We are the second country to have the highest taxes on sugar imports and today the sugar sector claims that there is damage with a few imports that do not exceed 10 thousand tons and they want a new tax."
Brenes added that "... One of the arguments of the sugar industry is that when the sugar is not sold in the local market, it has to be sold abroad and they have given us a sales price that is 45% lower abroad than the price that the sugar producers give to the Costa Rican consumer, this means that we Costa Ricans are the ones who are subsidizing the sugar that is sold in the international market, that is to say, that from our pockets we have to pay so that the foreigners have a cheaper sugar than what we receive in the country."
Regarding the accusation that consumption is falling because of imports, Brenes explained that "... Sugar consumption in the country is falling for other reasons, because consumers no longer consume so much sugar, and LAICA argues that per capita sugar consumption has fallen by almost 6 kilos in the last two years."
At the end of the investigation, the minister in charge will have to know the file, in order to decide whether to raise import tariffs.
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After the Costa Rican authorities raised the tariff on imported sugar from 45% to 73%, the South American country decided to raise before the World Trade Organization, a process to exercise the right of suspension.
In June of this year, the Alvarado administration decided to increase to 79% and for the term of three years, the tariff on sugar entering the country.
Arguing that local production must be protected, Costa Rican sugar manufacturers demand that, in addition to the 45% common levy already charged on imported sugar, an additional tariff must be imposed.
The request was made by Liga Agricola Industrial de la Caña de Azucar (Laica) to the Ministry of Economy, Industry and Commerce (MEIC), as businessmen claim that there is an exponential growth in sugar imports in recent years, which has put in check the Costa Rican sugar cane sector.
A change of minister in Costa Rica will aid in increasing the cost of sugar via an import tariff hike, harming consumers and the food industry, and increasing protection for the powerful sugar lobby.
EDITORIAL
The decision taken by the new chief of the Ministry of Economy reflects a clear interest in meddling in a process that should be resolved at a technical and non-political level.The decision to declare whether or not dumping occured in a particular market and what measures should be taken in response, corresponds to the office of Trade Defense, and should be free from any possible political bias.
The Ministry of Economy has decided to impose a new tax of almost 7% on sugar imported from Brazil, in response to a lawsuit brought by the union of local producers.
With this new protectionist measure the government is trying to put an end to a conflict that arose in 2015 between the Agricultural Cane League (Laica) and the importer Maquila Lama, when this company denounced a proposal to amend the regulation on sugar fortification claiming it attempted to restrict trade of imported grain.
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