Mexico expects to export 1.5 million tons of sugar to the United States in the current season following a trade deal struck this week, the country's sugar chamber said, signaling a sharp drop from the previous season. The forecast compares with an estimated 1.9 million tons during the 2013/14 crop year that ended on Sept. 30, a decline of more than a fifth. Monday's accord, which must still be finalized, does not involve a fixed export quota but will instead use a formula to set allowed shipments to the U.S. market. The deal averts potentially steep duties on Mexican sugar exports to the United States, defusing a months-long dispute that threatened to escalate into a trade war. The accord will last five years and will then be revised, said Juan Cortina, president of Mexico's sugar chamber. "I think it's a win-win agreement that benefits both sides," Cortina told reporters. Francisco De Rosenzweig, Mexico's deputy foreign trade minister, said the deal provides Mexico with more favorable export terms than in previous years. The sugar chamber estimated 30 to 40 percent of Mexican shipments to the United States this year will be refined sugar and the rest standard sugar. Sugar buyers in the United States will need some 1.8 million tons of the sweetener during the 2014/15 crop year that began Oct. 1, based on Reuters calculations using U.S. government estimates for demand, domestic production and import allotments to other foreign suppliers made via trade agreements. In the deal hammered out hours before U.S. regulators were going to announce large penalties on Mexican imports, the U.S. Department of Commerce said officials initialed a draft agreement that would suspend both the anti-subsidy and anti-dumping duties on the goods, if adopted in full. The deal, expected to be finalized by late next month, will set a price floor to guard against undercutting or keeping U.S. prices artificially low, smooth out supply over the year and limit the amount of refined sugar that may enter the U.S. market. Until it is finalized, U.S. importers of Mexican sugar will have to pay cash deposits of up to 56.37 percent in combined duties, which will then be reimbursed when the deal comes into effect. The American Sugar Alliance, which represents U.S. petitioners, said in a statement: "U.S. sugar producers and consumers alike will benefit if an agreement is finalized." The U.S. Corn Refiners Association also welcomed the agreement, saying it averts the threat to the countries' "robust" trade relationship. Some criticized the deal. The Sweetener Users Association, which represents U.S. buyers, said the agreement will keep food manufacturers' costs high. [ Carlos Rello, head of the FEESA fund that runs Mexico's state-owned mills, which produce about a quarter of the country's output, said it would curb Mexico's unfettered access to the U.S. market. But he added that, under the circumstances, "it's the best situation that could have been negotiated for Mexico". (Reuters)