News Release

FOR IMMEDIATE RELEASE                                             CONTACT:    Curt Mercadante

November 25, 2003                                                                                           202-331-1634

Corn Refiners Laud Chairman Grassley’s

Introduction of ‘Tequila Tariff’ Bill Over Sweetener Dispute

WASHINGTON, DC – The Corn Refiners Association (CRA) today lauded Senate Finance Committee Chairman Charles Grassley (R-IA) for his introduction of legislation to impose trade duties on Mexican products such as tequila in retaliation for that country's barrier to imports of U.S. high fructose corn syrup (HFCS).

“Chairman Grassley has given thousands of corn refiners and corn growers across this country something extra to be thankful for this Thanksgiving weekend,” said CRA President Audrae Erickson.  “This legislation is proof positive that Congress’ repeated threats of retaliatory action have not been idle warnings.  It should serve as a final wake-up call to the Mexican government and Congress that continued inaction to resolve the sweetener dispute will no longer be tolerated by the U.S. Congress.”

In January 2002, Mexico enacted a 20% tax on all soft drinks containing high fructose corn syrup (HFCS).  The tax has caused significant investment and job losses to U.S. companies that made substantial investments in Mexican and U.S. HFCS capacity, and it has shut down U.S. exports for nearly two years.  Mexico was the top export market for U.S. HFCS shipments prior to the tax. 

The Mexican Agricultural Trade Compliance Act (MATCA) includes the following provisions:

• MATCA finds that the Government of Mexico is engaged in a systematic pattern of behavior designed to deprive legitimate access to the Mexican market for U.S. exporters of HFCS.
• The MATCA notes that these efforts to deprive U.S. HFCS exporters access to the Mexican market were found inconsistent with the Government of Mexico's international trade obligations by the WTO Appellate Body on two separate occasions. In addition, NAFTA panels on two different occasions determined that Mexico's actions violated Mexico's international trade commitments. Mexico's imposition of a 20 percent tax on soft drinks containing high fructose corn syrup is the most recent manifestation of these efforts.
• The MATCA thereby establishes that the Government of Mexico has engaged in a pattern of activity that has continuously denied the rights of U.S. exporters under existing international trade agreements and that denial of these rights is unjustifiable and burdens or restricts U.S. commerce, thereby meeting the statutory criteria under Section 301 of the Trade Act of 1974 for retaliatory action.
• The MATCA requires the United States Trade Representative (USTR) to retaliate, pursuant to Section 301 of the Trade Act of 1974, against imports from Mexico within sixty days of enactment of the MATCA, unless the USTR certifies within 30 days after enactment of the MACTA, that the Government of Mexico has eliminated its most recent barrier to U.S. exports of HFCS and is according the U.S. HFCS industry the benefits of all applicable trade agreements.
• Products which could be subject to retaliatory duties include bottled tequila, tomatoes, bell peppers, avocados, limes, asparagus, mangos, papayas, watermelons, honey, pecans, and shrimp and prawns.
• Retaliatory duties could be as high as $465 million annually.

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Editor’s Note:  You can view Chairman Grassley’s floor speech introducing the bill and the accompanying press release at:  http://grassley.senate.gov/releases/2003/p03r11-25.htm.