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HFCS
Developments in Mexico not so Sweet, Corn Exports Targeted (1-4-02)
Under
pressure to pass a new budget and revenue provision for the year, the
Mexican Congress passed a bill that would place up to a 20 percent tax
on soft-drinks that contain sweeteners other than cane sugar. "The
measure taxes High Fructose Corn Syrup out of the market, and severely
hurts U.S. corn exports," said Tim Hume, a corn grower from Walsh,
Colorado, and president of the National Corn Growers Association (NCGA).
"The levy will force soft drink manufacturers to use expensive
cane sugar, effectively penalizing a large portion of the Mexican population
by barring access to a clean, caloric rich food, through government
caused price increases."
Annual
U.S. exports of High Fructose Corn Syrup (HFCS) and corn processed into
HFCS are valued at $300 million, using an estimated 60 million bushels
of corn a year. "Value-added corn products, like HFCS, make up
a growing percentage of our corn exports," said Hume. "If
we are to successfully expand new markets for corn, we must halt protectionist
measures such as the proposed tax."
The
imposition of the tax would violate the North American Free Trade Agreement
(NAFTA), and the rules of the World Trade Organization (WTO). Hume continued,
"Since the passage of NAFTA, Mexico has become our second largest
corn customer - it is disappointing to see the Mexican government take
action that violates our mutually agreed upon trade agreements."
The
new revenue provision did more than levy a new tax on soft drinks, however.
The law also threatens bulk exports of corn to Mexico. Under NAFTA,
Mexico agreed to import duty-free 3.2 million tons of corn annually.
Imports above that level are subject to duties as high as 120 percent.
Currently, the United States exports 5.76 million tons of corn to the
nation. Under the new law, U.S. exports would be subject to reduction
by 500,000 tons of corn annually, and the law reserves the right to
impose a duty on imports over the 3.2 million ton threshold. Mexican
growers have requested placing a tariff of 30 percent on corn imports
over the 3.2 million ton level.
"We
have worked very hard over the years to create a system of free trade
with Mexico that benefits both nations. What the Mexican Congress did
was more like the blatant protectionist actions of the EU than what
we have come to expect of our second most important export customer."
concluded Hume.
Last reviewed
January 4, 2002
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