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Mexico Moves to Protect Sugar Industry - 2001-09-04

The government of Mexican President Vicente Fox has expropriated 27 sugar refineries in an effort to protect the downtrodden industry and the many workers who rely on it. The government action contradicts Mr. Fox's general free-market philosophy.

In a move that took most Mexicans by surprise, Mexico's Secretary of Agriculture, Javier Usabiaga, on Monday announced the decision to take over the sugar plant operations.

He said the government had made the decision to use legal action outlined in the Mexican constitution, to take over private properties for the overall good of the nation. He said the sugar industry is in a crisis that has developed over recent years and that the only way to save certain refineries and the employment they provide was for the government to take immediate action.

The seized properties were all on the brink of bankruptcy and had failed to pay producers for sugar cane delivered to the refineries.

But critics of the action arose immediately to question why a government that has favored free-market policies would now reverse direction and start expropriating properties.

However, Mexico's Secretary of the Economy, Luis Ernesto Derbez, denied there has been a shift in policy.

He said this does not represent a change in policy, but is an action taken to restore order to a beleaguered industry. As a result of the expropriations, Mexican taxpayers will now foot the bill for keeping the money-losing plants in operation. The sugar industry has been in a downturn for several years, as a result of low prices on the world market and the widespread use of sugar substitutes in the United States and elsewhere.

Still, Mr. Derbez says he expects to see sugar exports to the United States increase next year to about 200 thousand tons. Under the North American Free Trade Agreement, Mexico is supposed to be able to ship up to 500 thousand tons to its northern neighbor. But a dispute over that provision and Mexico's refusal to allow in U.S. corn sweeteners has kept most Mexican sugar out of the U.S. market.

The dispute may be one of the matters President Fox will bring up during his discussions with President Bush in Washington when he begins his official state visit to the United States on Wednesday.