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U.S. files WTO case against Mexican corn syrup
WASHINGTON (DTN)--The United States has filed a case against Mexico with the World Trade Organization challenging that country's tax on high fructose corn syrup, U.S. Trade Representative Bob Zoellick announced March 16.
The case charges that Mexico's 20 percent sales tax and 20 percent distribution tax on sweetened beverages that do not use cane sugar are "inconsistent with Mexico's obligations in the WTO to apply taxes on comparable domestic and imported products in a non-discriminatory manner"
Mexico began importing high fructose corn syrup in the 1990s, but after the U.S. government and Mexico got into a conflict over how much Mexican sugar the United is supposed to admit under NAFTA, Mexico began applying the tax to beverages that use high fructose corn syrup or any other sweetener except cane sugar. The tax has essentially made high fructose corn syrup too expensive to use in Mexican soft drinks.
"Mexico's beverage taxes are discriminatory and protectionist," Zoellick said in a news release. "We attempted to settle this dispute through negotiations, in close consultation with our industry. Unfortunately, the negotiations did not resolve the matter, so now it is time to enforce our rights in the WTO."
A U.S. trade official told reporters March 16 if the United States wins the case the WTO would punish Mexico without requiring the U.S. to admit more Mexican sugar. The official said Mexico would not have grounds to file a WTO case on the sugar dispute because that dispute involves NAFTA rules, not WTO rules.
Senate Finance Committee Chairman Charles Grassley, R-IA, who had urged Zoellick to file the case, praised the decision to file. Grassley added that he would "continue examining other means of getting Mexico to lift the high fructose corn syrup tax" including a bill he introduced that would impose retaliatory tariffs on Mexican tequila and other Mexican agricultural products if the high fructose corn syrup tax is not removed.
The U.S. trade official denied that Zoellick was filing the case due to congressional pressure, saying USTR's "patience had run out" and the issue "had been percolating for a long time." Zoellick did appear to want to claim political credit for the decision, however. He said in the statement, "This Administration will continue to work to make sure Americans are treated fairly and that there is a level playing field for our exports."
The Corn Refiners Association also praised the decision to file. "This tax shut down our top foreign market for high fructose corn syrup sales overnight," CRA President Audrae Erickson said in a news release. "Our industry has paid a terrible price of lost sales, seriously eroded investments and lost jobs. We must resolve this longstanding dispute in a manner that re-opens the Mexican HFCS market to our industry as soon as possible." The filing of the case seemed to indicate, however, that private efforts by the sweetener industries in both countries to resolve the issue had failed.
The U.S. trade official said he did not think filing the high fructose corn syrup case would complicate efforts to convince Mexico to further open its market to U.S. beef because the two countries consider the sweetener and mad cow disease issues separately.
Date: 4/8/04
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