WASHINGTON - U.S. Trade Representative Robert B. Zoellick today reported that he has had three meetings with Mexican Ministers this month in which he stressed the illegality and serious damage of a new protectionist, discriminatory Mexican tax on soft drinks made with high fructose corn syrup (HFCS).
"The protectionist action by the Mexican Congress is discriminatory and destructive," Zoellick said, "and establishes a major barrier in the way of a settlement of the broader sweetener disputes. It will lead to more problems for Mexican agriculture and of course will be costly for Mexican consumers."
"Mexico has also sent a very negative signal to investors at the same time it is inviting foreign investment," Zoellick added. "The new tax will not raise any revenues, but it will raise the risks for all investors considering doing business in Mexico."
"I have made clear that we expect Mexico to quickly end the discriminatory treatment of soft drinks made with HFCS," said Zoellick.
Zoellick registered the strong U.S. complaint in meetings with Mexican Economy Minister Derbez on Friday, January 18 as well as on January 4, and with Mexican Foreign Minister Castañeda on January 11.
On Saturday, January 19, Minister Derbez met with representatives of the U.S. agricultural sector, including corn growers and refiners, where he informed them that the Fox Administration is committed to solving this problem.
The new Mexican tax, which came into effect on January 1, 2002, does not apply to soft drinks made with cane sugar. The tax will effectively eliminate the use of HFCS in the Mexican beverage industry, and will reduce sales of HFCS by U.S. firms, lower U.S. corn exports used to produce HFCS, and threaten U.S. beverage exports. Moreover, the tax also would have a negative effect on Mexico's corn refining sector, in which there is significant U.S. investment.
The Bush Administration and the American sugar, HFCS, and food processing industries have all made clear their shared objective and willingness to negotiate an equitable and sustainable solution to the broader disputes over U.S.- Mexican sweetener trade that have existed for several years.