CRA Accepts Sweetener Deal with Mexico

The 20 percent soft drink tax, enacted by the Mexican Congress in January 2002, was ruled illegal by the WTO and later reaffirmed by the WTO Appellate Body in March 2006.

01/08/06 The Corn Refiners Association (CRA) today welcomed an agreement that begins to address the decade-long high fructose corn syrup (HFCS) dispute with Mexico. The U.S. Department of Agriculture announced a 15-month HFCS tariff-rate quota to Mexico, beginning October 1, 2006, leading to free trade on January 1, 2008.

"The corn refining industry welcomes this agreement that guarantees access for HFCS to the Mexican market, eliminates the soft drink tax and removes all tariffs on HFCS exports. It sets in motion an irreversible path to free trade in January 2008, as the NAFTA intended," said Audrae Erickson, president of the Corn Refiners Association.

"Although the deal does not fully compensate our industry for the more than $4 billion in losses over the past ten years, or fully resolve all outstanding disputes, it solidifies the promise for increasing U.S.-owned corn sweetener presence in Mexico. CRA applauds the efforts of the USTR and USDA teams that worked hard to achieve this important breakthrough," Erickson continued.

The agreement covers the period October 1, 2006, through December 31, 2007. It provides for 250,000 metric tons dry basis of HFCS access into Mexico for the first twelve months and a minimum of 175,000 metric tons, or up to a maximum of 250,000 metric tons, for the remaining three months. An equivalent amount of access will be granted for Mexican sugar exports to the United States. The soda tax will be eliminated in January 2007, consistent with an agreement reached between Mexico and the United States and as notified to the World Trade Organization (WTO). All duties will be removed on U.S.-Mexico sweetener trade effective January 1, 2008, as required by the NAFTA.

The 20 percent soft drink tax, enacted by the Mexican Congress in January 2002, was ruled illegal by the WTO and later reaffirmed by the WTO Appellate Body in March 2006.

Since 1997, the sweetener impasse with Mexico has resulted in more than $4 billion in lost HFCS sales, both HFCS exports and U.S.-owned HFCS sales in Mexico, or in excess of 800 million bushels of corn production, including lost corn sales to Mexico intended for sweetener production.