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Mexico sugar spat could hit U.S. fructose -Mexican minister

PANAMA CITY, April 2 (Reuters) - U.S. fructose exports to Mexico may suffer if the United States seeks to slap anti-dumping duties on imports of Mexican sugar and local farmers seek retaliation, Mexican Economy Minister Ildefonso Guajardo said on Wednesday.

U.S. industry groups on Friday accused Mexican exporters of dumping cheap, subsidized sugar on the U.S. market, firing the opening broadside in a potential trade war after months of growing tension in the sweetener industry.

Mexico's government said the move was against the spirit of the two countries' trade accords, and Guajardo said in an interview that if the United States took steps that hit Mexican sugar exporters, the industry would likely react.

"Obviously if they can't sell sugar in the U.S. market and they're being affected by an increase in fructose imports, they're going to be very interested to see if that fructose isn't subsidized and arriving with unfair advantages," he said, adding Mexico had been "taken by surprise" by the U.S. move.

Guajardo noted his government did not have the right simply to retaliate against any U.S. moves, but that Mexican farmers could seek an investigation into U.S. fructose production by the government unit responsible for monitoring international trade.

"If the unit does the investigation and concludes that there is a subsidy or dumping, then they can recommend the imposition of (measures)," Guajardo said.

Mexico's sugar industry could also still reach its own accord with the United States to resolve the dispute.

Mexico and Washington have locked horns over trade a number times in the last few years, most recently on meat labeling and tuna fishing practices.

In the meat dispute, Mexico and Canada have taken the United States to the World Trade Organization, which Guajardo said could take "all year" to reach a final ruling.

CAR TRADE

Separately, Guajardo noted he was confident that Mexico, which became embroiled in a row over auto exports with Brazil and Argentina in 2012, could resolve them next year.

"The idea is that we get to free trade in 2015 again in the (auto accord) with both Brazil and Argentina," he said.

In March 2012, Mexico agreed to limit auto sales to Brazil for three years, and shortly afterwards its accord with Argentina broke down after Buenos Aires tried to push Mexico into making similar concessions to those it had made to Brazil.

Turning to the Trans-Pacific Partnership (TPP), trade talks that aim to create a free-trade zone across the Pacific region, Guajardo said hold-ups meant the process was likely to take longer than he had previously anticipated.

"There are still expectations that it could conclude in the first part of this year, in this quarter. Now, the language I'm hearing is 2014," said Guajardo, who earlier this year had said the TPP could wrap up as soon as April.

The TPP would cover almost 40 percent of the global economy and create a free-trade zone reaching from North America to Japan and New Zealand.

(Reporting by Dave Graham; Editing by Lisa Shumaker)