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FARGO, N.D. -- It's too say how soon to a favorable
court ruling on "stuffed molasses" shipments into the United
States will affect imports and prices, a beet sugar official says.
Luther Markwart, executive vice president of the
American Sugarbeet Growers Association in Washington, says a recent
decision by the U.S. Court of Appeals in Washington will lead to a U.S.
Customs decision on when to stop the sugary syrup from coming into the
country. A legislative fix still is needed, he says.
U.S. sugar producers had fought the imports as a sham
that allowed a company to import sugar from Canada outside of tariff rate
quotas. The 100,000 tons of imports is an amount equal to about 50,000
acres of beet production, but has a bigger effect on the market because it
creates price leverage for buyers.
"Usually they'll give companies a certain amount
of time to cease those operations," Markwart says.
In the courts
The appeals court overturned a lower court decision
that should stop a "stuffed molasses" scheme that had allowed
Canadian sugar into the United States outside of tariff rate quotas.
The appeals court found that "what's been going
on here is nothing but a sham and a charade and it ought to stop,"
Sen. Kent Conrad, D-N.D. commented in a Budget Committee field hearing in
Fargo, N.D., in which farm leaders testified on the 2001 farm bill. Conrad
says he is "very heartened" by the ruling and hopes it would
further stand.
"If countries can start to engage in this kind
of Mickey Mouse -- creating a product that doesn't exist, calling it
stuffed molasses, bringing it into the United States, reconstituting it
here, making it a sugar product, which it was all along -- (then)
everything is fair game.
"If there are no rules in this international
trading environment, then we can start to play games, too."
The case
The case, Heartland By-Products Inc. v. the U.S.
Department of Agriculture, originally was designed to stop the U.S.
Customs Service from keeping making "stuffed molasses" or
"sugar syrup" and importing it from Canada.
Since 1997, Heartland brought the sugar syrup into
the United States and extracted sugar from it, adding to U.S. oversupplies
that have contributed to 22-year lows in the sugar market. The product
then was re-exported, re-stuffed and then re-imported. U.S. Customs
proposed to stop the process in June 1999, describing it as a
"disguise or artifice" to escape the duty. That September,
Heartland filed for a preliminary injunction, and the trade court
eventually ruled in favor of Heartland.
A U.S. Court of International Trade found in favor of
Heartland and the decision was appealed by USDA and the U.S. Beet Sugar
Association. The appeals court ruled that the original Customs ruling was
"logical andwell-reasoned."
Markwart and Mark Weber, executive director of the
Red River Valley Sugarbeet Growers Association in Fargo, say the decision
may help speed passage of the Breaux-Craig bill, which has been
languishing in the Senate for nearly two years. The bill is broader than
just stuffed molasses and would include other products rather than the
specific category.
Markwart speculates that Heartland or others already
may be looking at a different product to replace stuffed molasses, but
adds, "We're getting a sense in the marketplace that their customers
are beginning to scatter, meaning there isn't a lot of confidence in the
source of supply."
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