 |
|
|
 Business News | October 2005 
WTO: Mexico's Tariff Illegal
 Mark Drajem - Bloomberg
Mexico's 20 percent tax on corn sweeteners used in soft drinks violates global trade rules and should be eliminated, the World Trade Organization ruled.
Imported sweeteners "are accorded less favorable treatment than domestic goods," undermining a key WTO principle, the WTO panel ruled in a 163-page ruling published on its Web site. Today's WTO decision confirms a preliminary ruling in June.
"Mexico needs to eliminate this tax as soon as possible, and in doing so, I urge Mexico not to merely substitute one barrier" for another, U.S. Trade Representative Rob Portman said in a statement.
Mexico, which imposed the tax in January 2002 in a retaliatory move against the U.S. for curbing the country's sugar exports, said it hasn't decided if it will appeal.
Without a formal compromise with the U.S. under the North American Free Trade Agreement, "Mexico will adopt measures it considers necessary to protect the interests of our sugar industry," the Economy Secretariat said in a statement.
The tax led CocaCola Femsa SA and the Mexican unit of Pepsi Bottling Group Inc. to buy more sugar, driving up prices.
Hurting U.S. Exporters
It also sapped US944 million a year in exports from U.S. corn growers and makers of syrups such as Archer Daniels Midland Co. and Cargill Inc., according to the Corn Refiners Association in Washington. Removing the tax would lead to six-cents a bushel increase in U.S. corn prices, the group estimates.
Before the tax was imposed, 99 percent of high-fructose corn syrup consumption in Mexico was imported, the U.S. said.
On Sept. 30 the U.S. announced it would allow in 276,000 tons of Mexican sugar over the next 12 months, and, in return, Mexico said it would allow in the same quantity of corn sweetener.
According to the terms of Nafta, Mexico can ship its surplus sugar to the U.S. through 2008. The sweetener dispute between the U.S. and Mexico centers around the fact that U.S. tallies the surplus by including corn sweetener imports as well. That effectively limited Mexican sugar exports to the U.S.
Mexico protested the lower access for its sugar by imposing restrictions on corn sweetener imports from the U.S.
The WTO today ruled against Mexico's argument that although its beverage tax is discriminatory it is justified to secure compliance with U.S. obligations under the Nafta, according to the U.S. |
| |
|
Vallarta Weddings
Tell a Friend
Site Map
Print this Page
Email Us