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Mexican ship loaded with sugar stranded after US export spat

A ship loaded with sugar was stranded in port on the east coast of Mexico because of the break down in stop-gap measures designed to ease a long-standing trade dispute with the United States over sugar exports.

The vessel, carrying between 20,000 and 30,000 tonnes of raw sugar, is stuck in a port in the eastern Mexican state of Quintana Roo after Mexico canceled permits to export sugar to the U.S., Mexican sugar chamber head Juan Cortina said on Thursday.

Prashanth Vishwanathan | Bloomberg | Getty Images

The Mexican government said it canceled the permits to avoid reaching seasonal export limits under trade accords with the U.S. though it disputes actually reaching the limits.

Reuters reported earlier this week that Mexico wants to avoid possible sanctions after Mexican officials said the U.S. Commerce Department misinterpreted the agreements that have governed the sugar trade between the neighboring countries since 2014.

"There was a sugar mill...that was loading a ship headed to refineries in the United States and when it was ready to leave the port, we suddenly learned that the export contracts were being canceled," Cortina told Reuters in an interview.

Cortina said the 54 permits canceled with 23 mills involve between 100,000 and 120,000 tonnes of sugar.

A line of trucks wait for sugar to be unloaded from a vessel at the Port of Veracruz in Veracruz, Mexico, on Thursday, Aug. 29, 2013.
Susana Gonzalez | Bloomberg | Getty Images
A line of trucks wait for sugar to be unloaded from a vessel at the Port of Veracruz in Veracruz, Mexico, on Thursday, Aug. 29, 2013.

The so-called 'suspension agreements' reached in December 2014 prevented a trade war and established price floors and limits on the types of sugar that Mexican producers can send to the U.S., putting an end to free trade of the product under the North American Free Trade Agreement (NAFTA).

Both countries were in talks to renegotiate the deals, but they ended when former U.S. President Obama left office in January and Cortina said there is no set date for restarting talks.

Still, he warned that if the U.S. cancels the agreements, Mexican sugar producers will insist that the Mexican government halt fructose imports from the U.S.

The U.S., Mexico and Canada are expected to renegotiate NAFTA, spurred by current U.S. President Donald Trump, and sugar will be a critical part of the talks.

Cortina said that if sugar is dropped from NAFTA, the U.S. will suffer more because Mexico is the only market for its fructose.