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 Business News | August 2005 
Mexico Looking To Retaliate
 Wire services
Mexico may impose an import tariff of up to 210 percent on U.S. corn sweetener after the World Trade Organization ruled a local tax on high fructose violates trade agreements, said a Mexican trade official.
Mexico is studying option of a tariff to protect its sugar industry from U.S. corn sweetener imports because the United States blocks imports of Mexican sugar exports allowed under the North American Free Trade Agreement (NAFTA), said Hugo Perezcano, the trade ministry's legal director for international negotiations.
"We're considering resolving the tax issue and substituting it with an import tariff under the NAFTA framework," Perezcano said in a telephone interview in Mexico City. "The WTO, for example, allows us to adopt a maximum tariff of 210 percent on fructose imports."
Mexico and the United States have disagreed on NAFTA's rules governing sugar and corn sweeteners even before the pact took effect in January 1994 when the two nations exchanged letters in a bid to make last-minute changes to sugar rules, Perezcano said. Mexico doesn't recognize the letters as binding while the United States does, he said.
The WTO is expected to publish a report early next month that rules Mexico's 20 percent tax on soft drinks containing corn sweetener violates the trade agreement. The ministry may decline to appeal the decision, which could be resolved in less than three months, and instead apply the tariff, Perezcano said.
"Mexico recognizes it's a particularly difficult case," he said. "We consider that sooner or later we will have an adverse decision."
Congress approved the tax in January 2002 in response to the WTO overturning dumping duties the trade ministry applied to U.S. corn syrup in 1998 that ranged between US64 and US175 per ton. The tax has 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.
"The best solution is a winwin through negotiations," said Augrae Erickson, the association's president in Washington. Erickson had been representing U.S. corn producers in negotiations with Mexico until May of last year, when it left the talks to sugar growers.
Perezcano said Mexico has determined it has the right to apply an import tariff on U.S. corn sweetener even though NAFTA calls for a zero tariff because the U.S. is violating the trade agreement by not allowing Mexico to export its excess sugar production.
Mexico asked a NAFTA panel in August 2000 to resolve the dispute over whether the U.S. letter signed by former Clinton administration chief trade negotiator Mickey Kantor or the original NAFTA text applies to sugar, Perezcano said. The United States has blocked formation of the panel for the last five years by refusing to name a panelist, he said.
"The United States is exploiting a deficiency in NAFTA," he said. "It's as if the chapter to resolve disputes didn't exist." |
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