Moves to end 'discriminatory' HFCS tax
between Mexico and the US could have cleared an impasse.
A protracted trade dispute over high fructose corn syrup and sugar between Mexico and the US could have cleared an impasse. In a speech to the Mexican Congress last week Mexican president Vicente Fox proposed the removal of the 20 per cent tax on soft drinks, but industry observers remain cautious.
"We've seen this before and we're not convinced that the Mexicans will remove the tax." Hayden Milberg, director of public policy at the National Corn Growers Association - the US industry body for corn - told FoodNavigator.com.
The Mexican government introduced the 20 per cent tax on high fructuse corn syrup (HFCS) - used as a sweetener in soft drinks - in January 2002 in direct retaliation to US moves blocking the import of sugar from Mexico.
"As long as the US blocks the imports, Mexico will not lift the HFSC tax," added Milberg.
Manufacturers of HFCS have already felt the impact of the tax. The effect is all the more acute because Mexico is the world's second largest consumer of soft drinks, and the market for HFCS was growing rapidly until the Mexican Congress imposed the 'discriminatory' tax.
UK producer Tate & Lyle last week reported that demand for the product in the first half of the year at its Mexican company Almex had remained flat.
Taking matters further, US agri-giant Archer Daniels Midland said last month that it will sue the Mexican government for $100m to make up for lost earnings as a result of the 'discriminatory' tax.
Fellow US HFCS producer Corn Products International has topped the figure, submitted an arbitration claim for 'about $325 million in compensation for past and potential lost profits and other damages' in relation to Mexico's imposition of the tax.
"In two weeks time we will meet with Mexican officials to discuss the issue," said Hayden Milberg. "We are hopeful, but cautious," he added.