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WTO also rules in favor of US beverage exports to Mexico

WASHINGTON, DC - 03/06/06 - A long-standing dispute over the cross-border trade in cement has been resolved with the signing of an agreement that resolves a long-standing dispute between Washington and Mexico City. 

The new agreement, said the Office of the US Trade Representative (USTR), "will provide a needed increase in the supply of cement in the US at a time of strong demand, as our Gulf Coast is accelerating its rebuilding following the devastation of Hurricanes Katrina and Rita."

The agreement, "opens the door for possible increased imports of Mexican cement, encourages US cement exports to Mexico and settles outstanding litigation," it added.

In addition, it also "responds to concerns by consumers and builders, notably those now rebuilding the Gulf Coast communities devastated by last summer's hurricanes."

The new cement pact provides for the resolution of all outstanding litigation pending under the WTO and NAFTA in connection with an antidumping order on Mexican cement. 

For each of the next three years, up to 3 million metric tons of Mexican cement, distributed regionally throughout the southern tier of the US may be imported at an anti-dumping duty of $3 per metric ton.

The deal also stipulates "if the president determines that a natural disaster warrants, additional cement up to 200,000 metric tons, may be imported at that same duty rate and the anti-dumping duty order will be revoked at the conclusion of the agreement."

At the same time, the WTO Appellate Body in Brussels has found in favor of the US in its challenge of Mexico's discriminatory beverage tax and the signing of an agreement to promote the trade in cement between the two countries.

With the finding, the WTO "has now confirmed that Mexico's beverage tax and reporting requirements - imposed in January 2002 - discriminate against US exports of HFCS (high-fructose corn syrup)."

It also found that "the discrimination is not justified under WTO rules nor does the NAFTA provide Mexico a justification to discriminate" against US-produced beverages, according to a statement released by the USTR. 

Under the tax challenged by Washington, soft drinks made with imported sweeteners, such as HFCS and beet sugar, had been subject to a 20% tax on their sale and distribution, while beverages made with Mexican-produced cane sugar are tax-exempt.

The beverage tax further imposes a 20% tax on the services used to transfer soft drinks and syrups (distribution services, for example), as well as subjecting taxed products to several Mexican government-mandated bookkeeping and reporting requirements. 

"The Appellate Body has confirmed that Mexico's beverage tax is discriminatory and breaks WTO rules," the statement said.

"It is clear that Mexico must eliminate this tax and restore fairness for our US corn growers and refiner…and we hope Mexico sees this decision as we do, as an opportunity to work together to quickly resolve all outstanding sweetener trade issues between us," it said.

The NAFTA calls for duties that remain on a handful of products, including sugar, to be eliminated by 2008, according to the US Department of Commerce.

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