NCGA Applauds U.S.-Mexico HFCS Agreement (7-31-06)

The National Corn Growers Association welcomes an agreement reached by the United States and Mexico allowing the United States duty-free access to the Mexican market for U.S. high fructose corn syrup (HFCS) beginning Oct. 1 through Sept. 30, 2007.

“NCGA applauds the ongoing efforts of President George W. Bush’s administration in resolving this critical issue of restoring market access for U.S. HFCS to our number one market for the product,” said Bob Bowman, NCGA’s chairman of the Joint Trade Policy A-Team. “This continues to be a critical issue for the U.S. corn industry. Our industry and the corn processing industry have been significantly impacted by the refusal of Mexico to grant fair and reasonable market access. This is a significant breakthrough, and we look forward to working with the administration to ensure complete resolution of the issue.”

Bowman noted that 7 percent of total U.S. corn production is used for corn sweetener, making it one of the largest processing markets for corn, and Mexico has been the top export market the U.S. corn sweetener industry for several years.

The U.S. Department of Agriculture announced the agreement as part of the statement released on the sugar program provisions for the remainder of fiscal year (FY) 2006 and for FY 2007 concerning administration of the tariff rate quotas (TRQ's) and the domestic allotment program.

As part of the agreement, Mexico will not impose duties on U.S. HFCS until Jan. 1, 2008. It also provides for 250,000 metric tons of HFCS access into Mexico for the first year and a minimum of 175,000 metric tons, or up to a maximum of 250,000 metric tons, for the remaining three months. An equivalent amount of access will be granted for Mexican sugar exports to the United States. The soft drink tax will be eliminated in January 2007, consistent with an agreement reached between Mexico and the United States and as notified to the World Trade Organization (WTO). 

The 20 percent soft drink tax, enacted by the Mexican Congress in January 2002, was ruled illegal by the WTO and later reaffirmed by the WTO Appellate Body in March 2006.

Since 1997, the sweetener impasse with Mexico has resulted in more than $4 billion in lost HFCS sales, both HFCS exports and U.S.-owned HFCS sales in Mexico.