Mexico Repeals Sweetner Tax

Mexico has repealed a controversial tax on soft drinks containing high fructose corn syrup (HFCS).

Mexico's legislature passed a law scrapping the 20% tax, which was put in place in January 2002 on soda and other drinks made with sweeteners other than cane sugar.

The move brings Mexico in line with a 2005 World Trade Organization ruling that found the tax unfairly discriminated against imports of HFCS from the U.S.

"We would expect that over a number of years we would have a potential to capture up to half of the (sweetener) market in Mexico," Audrae Erickson, president of the Corn Refiners Association, a U.S. industry group told Reuters News Service.

HFCS now accounts for about half of the U.S. sweetener market.

Erickson heralded the repeal as another step forward in a series of cross-border disputes over sweeteners. Since 1997, those disputes, including the soda tax, have cost the U.S. more than $4 billion in lost sales, she said.

But Mexico’s move will not produce an immediate boom in U.S. exports of HFCS, since the U.S. is operating under a quota system now. Instead, it will allow HFCS producers to expand their customer base in Mexico and set the stage for unrestricted trade in the future.

Editor’s note: Richard Brock, The Corn And Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

To see more market perspectives, visit Brock's Web site at www.brockreport.com.