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Because Canada has no duties on raw-sugar imports, the price Redpath pays is roughly half that paid by U.S.-based refiners. </caption>

Ship captain Sergei Kurash skippered the sugar freighter to Toronto from Nicaragua, via the Panama Canal, along the East Coast of the United States and up the St. Lawrence River.

That was a 16-day voyage, but the sugar's journey is far from over. After being refined at the Redpath Sugar Ltd. plant on the Toronto shoreline, the sugar will be packaged for grocery stores and food processors clustered around Canada's biggest city.

Half of the sugar will find its way into the United States – in cakes, candies and other treats. And the circuitous path is partly the result of the United States' protectionist sugar trade policies, which give a competitive advantage to Canadian factories that make sweet goods.

The sugar aboard Mr. Kurash's ship costs Canadian food processors about half of what it costs in the United States, where prices are inflated by U.S. protectionist measures for its domestic growers and refiners. This has fostered a robust Canadian candy-making sector, which serves the domestic market and makes sweets for sale to the United States.

The list of confectionery companies includes several global and U.S. firms, including Ferrero, Nestlé SA, Tootsie Roll Industries Inc. and Mondelez International Inc.

Virginia-based Mars Inc. recently spent $70-million to expand its factory in Newmarket, Ont., to launch Maltesers treats into the U.S. market. Mars, which has factories around the world – including several in the United States – said the plant's "close proximity to the U.S.," a skilled work force and potential for expansion made it a good place to build the 60,000-square-foot addition.

"There's no question that our ability to sell world-price sugar in a confectionery product in the U.S. has helped our ability to sell products down into the U.S.," said Susan Abel, a vice-president for Food and Consumer Products of Canada, whose members include confectioners.

In 2016, Canada shipped $1.8-billion worth of chocolates, candies and other confectionery to the United States, while it imported $800-million worth from the United States, according to Statistics Canada's customs data.

For Canadian food makers and sugar users, the new North American free-trade agreement talks are a chance to gain greater access to the U.S. market.

Sugar trade between Canada and the United States has become more restrictive – not open – since NAFTA's implementation in 1994, according to the Canadian Sugar Institute. This has amounted to a collective loss of exports of about 165,000 tonnes of sugar and related products, the group says.

Between 2004 and 2012, employment in the Canadian confectionery industry fell by 30 per cent to about 10,000 jobs, according to the federal government, even as sales rose by 12 per cent.

"We certainly want a seat at the table," says Sandra Marsden, president of the Canadian Sugar Institute, which lobbies on behalf of the sugar refiners.

As the crane unloads the raw sugar at the Redpath refinery, company president Jonathan Bamberger digs his phone out of his pocket and jabs at the screen. "There we are," he says, as world sugar prices pop up.

For the privately held U.S. company, which has refined sugar on the Toronto waterfront since 1959, there is no more important number. Because Canada has no duties on raw-sugar imports, the price Redpath pays is about half what U.S. refiners pay.

"That therefore gives [Canadian] manufacturers an advantage in the lower cost, assuming the products are allowed into the U.S.," Mr. Bamberger says.

Food makers are hoping for better – or at least the same – access to the U.S. market when the NAFTA is renegotiated. Hopes the United States will lower the barriers it has erected to protect Big Sugar are not as high, as the powerful U.S. refiners and cane growers are known. Sugar trade between Canada and the United States is not covered in NAFTA. Although the free-trade agreement lets Mexico export sugar duty-free to the United States, sugar has been a source of tension between the two countries.

U.S. producers and refiners accused Mexico of dumping low-priced, subsidized sugar in the United States, which retaliated with duties on Mexican sugar. The duties were lifted in 2014, and replaced by quotas and minimum prices.

Still, Big Sugar was not happy, and in June, the governments reached an agreement in principle that reduces the amount of refined sugar and lowers the quality of raw sugar Mexico sells to the United States.

The U.S. sugar refiners and producers say industry complaints about cheap Mexican sugar imports led to restrictions.

The agreement precedes NAFTA talks, and sends a signal the United States is in no mood to lower the wall it has erected around its sugar industry.

The United States protects Big Sugar with a labyrinth of tariffs, production quotas and government loans aimed at keeping prices high for sugarcane growers and refiners.

Growers borrow from the government at low interest rates using their crops as collateral. If prices fall, growers default on their loans and forfeit their crops to the government. But the government does not want to own sugar. So to keep prices elevated, the government has tiny import quotas and 100-per-cent-plus tariffs.

The result is U.S. prices are about double the world price.

"It is fairly complicated and that's intentional. So it's hard for people to criticize because it's hard to understand," said Richard Pasco, president of the U.S. Sweetener Users Association, which represents most of the large U.S. bakeries and confectioners.

Professor Sarah Dunphy, an Ontario native and an expert on trade negotiations who teaches at the University of Detroit's Mercy School of Law, said Big Sugar's favoured treatment is a result of politically motivated protectionism and compromise. In previous trade talks, Canada retained dairy supply management; the United States kept Big Sugar's protections.

The United States consumes about 11 million tonnes of sugar a year, but produces just eight million tonnes.

Canada does not grow sugarcane, but parts of the country produce sugar beets. Canada has four sugar refineries, including Redpath's Toronto plant. Lantic Inc. makes cane sugar in Vancouver and Montreal, and beet sugar in Taber, Alta.

The United States grows sugarcane in Florida, Louisiana, Texas and Hawaii. Sugar beets are grown in several northern states.

In the NAFTA talks, the United States is seen as unlikely to risk angering Big Sugar, not to mention the all-important votes in the U.S. heartland.

The negotiations bring new risks to Canadian interests. A majority of respondents to a recent poll think a renegotiated trade deal will have a negative impact on Canadian jobs, the economy and food prices, according to a poll commissioned by Food and Beverage Ontario.

But Prof. Dunphy predicts Big Sugar will remain untouchable, which means that ships such as the MV Brant will continue to make the journey to Toronto from Latin America.

Environment Minister Catherine McKenna says the auto industry has expressed its support for free trade in North America. The U.S. chief negotiator targeted the sector on the first day of NAFTA talks in Washington on Wednesday.

The Canadian Press

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Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:00pm EDT.

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Tootsie Roll Industries
+0.22%32.03

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