The Honorable Robert Zoellick
United States Trade Representative
600 17th Street, N.W.
Washington, D.C. 20508

Dear Ambassador Zoellick:

Last week the Mexican government placed a tax of up to 20 percent on soft drinks that contain high fructose corn syrup (HFCS).

This tax will end U.S. exports of HFCS and close the market for U.S. corn used by American companies to produce HFCS in Mexico. It will reduce sales of HFCS by U.S. firms by $240 million and will reduce U.S. corn sales by $66 million. And, it will continue the price depression in the U.S. HFCS market caused by Mexico's failure to comply with repeated NAFTA and WTO rulings that Mexico's anti-dumping duties on HFCS are illegal.

Also in this legislation, the U.S. corn industries were given another significant trade barrier, as the Mexican Congress has taken for itself the authority to set tariffs on corn imported over NAFTA minimum levels. The Mexican Congress is likely to use this authority to set tariffs for this important market at levels that could jeopardize over 3 million tons of corn exports.

These are unacceptable developments to the U.S. corn growing and processing industry, and demonstrate that U.S. firms have no security in their investments in the Mexican economy.

On December 10 you and Minister Derbez agreed to good-faith negotiations on the issues of trade in HFCS and sugar. This tax is a serious breach of this understanding and is a clear violation of both the NAFTA and WTO agreements. The United States must do whatever is necessary to persuade Mexico to comply with its international obligations, and do so immediately.

The Government of Mexico appears to have several immediate options to remove this tax including legal challenge to its constitutionality, administrative measures to delay or suspend its implementation and a request for immediate revocation by the legislative branch.

We ask that you seek a commitment from the Government of Mexico by the close of this week to take whatever steps are within its power to prevent this tax from going into effect in order to prevent further damage to America's largest agricultural sector.

Sincerely,

Bob Stallman
President
American Farm Bureau Federation

Tim Hume
President
National Corn Growers Association

Dale Spurgin
Chairman
U.S. Grains Council

Michael Jorgenson
Chairman
Corn Refiners Association, Inc.

ST. LOUIS OFFICE

WASHINGTON D.C. OFFICE