USGC applauds beverage tax rule

The U.S. Grains Council applauds the positive finding by the World Trade Organization Appellate Body in favor of the United States in its challenge of Mexico's tax on beverages containing high fructose corn syrup (HFCS).

“The WTO reaffirmed that Mexico was in violation of its WTO commitments,” said Kenneth Hobbie, USGC president and CEO. “This ruling is a win for U.S. corn producers and other council members.”

According to the Corn Refiners Association (CRA), $944 million in HFCS sales, equivalent to 168 million bushels of corn, has been lost by U.S. farmers and corn processors every year that the tax has been in place. The sweetener dispute, which began in 1997, has cost the United States more than $4 billion in HFCS exports and U.S.-owned HFCS sales in Mexico. CRA, a member of the council, estimates that the price per bushel of corn in the United States could rise by 10 cents in key corn states, or 06 cents nationally, when the Mexican market for corn sweeteners is fully restored.

The 20 percent tax on soft drinks made with imported sweeteners such as HFCS was imposed by the Mexican legislature in January 2002. The tax has also affected several major U.S.-owned HFCS producers in Mexico who rely on U.S. corn to sustain their operations.

“The Appellate Body has confirmed that Mexico's beverage tax is discriminatory and breaks WTO rules” said U.S. Trade Representative Rob Portman in a press release Monday. “It is clear that Mexico must eliminate this tax and restore fairness for our U.S. corn growers and refiners. We hope Mexico sees this decision as we do, as an opportunity to work together to quickly resolve all outstanding sweetener trade issues between us.”

The WTO issued a final ruling on the HFCS case in favor of the United States on Oct. 7, 2005, which was later appealed by the Mexican government. The WTO Appellate Body ruling on March 6, 2006, upheld the decisions of the final WTO panel report and sided with the United States on all counts.

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