Tariff Rate Quota Announcement
What is a TRQ?
A tariff-rate quota is a quota for a volume of imports that enters a country at no tariff or a low tariff. After the quota is reached, a higher tariff is applied on additional imports. Suppose a country replaces its "absolute" quota of 10,000 tons with a TRQ of 10,000 tons. The TRQ appears to differ little from the earlier "absolute" quota. The distinction is that under an absolute quota it is legally impossible to import more than 10,000 tons, whereas under a TRQ, imports can exceed 10,000 tons but a higher, over-quota tariff is applied on the excess.
In principle, a TRQ provides more market access to imports than a quota. In practice, however, many over-quota tariffs are prohibitively high and effectively exclude imports in excess of the quota. It is possible to design a TRQ so that it reproduces the trade-volume limit of the quota it replaces.
USTR Announces FY 2011 Tariff-Rate Quota Allocation for Refined Sugar
Washington, D.C. – The Office of the United States Trade Representative (USTR) today announced the allocations for the increased fiscal year (FY) 2011 in-quota quantity of the tariff-rate quota (TRQ) for imported refined sugar. TRQs allow countries to export specified quantities of a product to the United States at a relatively low tariff, but subject all imports of the product above a pre-determined threshold to a higher tariff.On September 29, 2011, the Secretary of Agriculture increased the in-quota quantity of the TRQ for refined sugar for FY 2011 by 136,078 metric tons raw value (MTRV), none of which is reserved for specialty sugars. USTR is allocating a total of 25,000 MTRV of this amount to Canada and 111,078 MTRV to be administered on a first-come, first-served basis, subject to any other provision of law. This addition to the refined sugar TRQ will open on September 29, 2011, and may be entered until November 30, 2011. The certificate of quota eligibility is required for sugar entering under the tariff-rate quota for refined sugar that is the product of a country that has been allocated a share of the tariff-rate quota for refined sugar.
*Conversion factor: 1 metric ton = 1.10231125 short tons.
Mexico
As USDA noted in its press release of July 27, the United States and Mexico have determined jointly, in accordance with Annex 703.2 of North American Free Trade Agreement (NAFTA), that Mexico is projected to be a net surplus producer of sugar for FY 2007, and accordingly that Mexico will be permitted to enter up to 250,000 metric tons raw or refined sugar duty free in FY 2007. Quantities allocated to Mexico under WTO raw cane sugar tariff-rate quota, but not the WTO refined sugar tariff-rate quota, will be counted against this amount. Certificates for quota eligibility are required for entry of tariff-rate quota sugar from Mexico.
As also noted in the USDA press release, the United States and Mexico have reached an agreement on market access for sweeteners. That agreement, set forth in an exchange of letters dated July 27, 2006, provides Mexico duty-free access to the United States for 250,000 metric tons raw value of raw or refined sugar in FY 2007 and at least 175,000 metric tons raw value of raw or refined sugar for the first three months of FY 2008 (Oct. 1 through Dec. 31, 2007). Under the agreement, Mexico will provide reciprocal access for U.S. high fructose corn syrup (HFCS), including 250,000 metric tons in FY 2007 and at least 175,000 metric tons for the first three months of FY 2008 (Oct. 1 through Dec. 31, 2007). Mexico also commits that effective January 1, 2008 it will not impose duties on U.S. HFCS. The United States and Mexico confirm that on July 3, 2006 they submitted a joint letter to the WTO Dispute Settlement Body regarding the elimination of Mexico's soft drink and distribution taxes. Mexico will establish a duty-free quota for U.S. sugar of not less than 7,258 metric tons raw value for each of marketing years 2006, 2007, and 2008. The over-quota tariff on U.S. sugar will be eliminated effective January 1, 2008 as provided for in the NAFTA.
For its part, Mexico announced on July 27 its actions to implement the July 27 agreement with respect to FY 2007 amounts. Mexico and the United States will consult before July 1, 2007 in order to set allocations for the first three months of FY 2008, which per the agreement may range from 175,000 metric tons raw value to 250,000 metric tons raw value.
*Conversion factor: 1 metric ton = 1.10231125 short tons.