U.S. HFCS dispute with Mexico goes to a WTO dispute settlement panel

Food & Drink Weekly, June 21, 2004

The US government earlier this month requested establishment of a WTO Dispute Settlement Body (DSB) panel to help settle a lingering sweetener dispute with Mexico. The US considers certain tax measures of the government of Mexico on soft drinks and other beverages as well as on syrups, concentrates, powders, essences or extracts that can be diluted to produce such products (beverages and syrups) that use any sweetener other than cane sugar are inconsistent with Mexico's commitments and obligations under the GATT. Mexico's tax measures impose a 20 percent tax on beverages and syrups that use sweeteners other than cane sugar. Mexico's tax measures also impose a 20 percent tax on services related to the transfer of beverages and syrups, including the commissioning, mediation, agency, representation, brokerage, consignment and distribution of such products. Beverages and syrups sweetened only with cane sugar, and services related to their transfer, are not subject to these measures.

US trade officials charge that Mexico's tax measures also impose several bookkeeping and reporting requirements on beverages and syrups, and services related to the transfer of such products, that are not similarly imposed on beverages and syrups sweetened only with cane sugar, or on services related to the transfer of beverages and syrups sweetened only with cane sugar.

The US believes Mexico's tax measures discriminate against imported sweeteners other than cane sugar (including high-fructose corn syrup [HFCS]), and imported beverages and syrups made with such sweeteners, because Mexico's tax measures do not apply to cane sugar, or beverages and syrups made solely with cane sugar. The US considers imported sweeteners other than cane sugar, and imported beverages and syrups made with such sweeteners, including HFCS and beverages and syrups made with HFCS, to be like and directly competitive or substitutable with Mexican cane sugar and beverages and syrups made with Mexican cane sugar--thus the reason for the US request for a DSB panel.