US and Mexico sweetener dispute yields $58m for HFCS damages

By Caroline Scott-Thomas

- Last updated on GMT

Related tags: International trade, North american free trade agreement, Mexico

Corn Products International’s Mexican affiliate CP Ingredientes has been awarded $58.386m in damages by a NAFTA tribunal after Mexico placed discriminatory taxes on high fructose corn syrup (HFCS).

In January 2008, a North American Free Trade Agreement (NAFTA) tribunal unanimously upheld that Mexico had breached its obligations under the trade agreement by discriminating against beverages sweetened with HFCS – most of which is produced outside of Mexico – in order to favor domestically produced sugar.

Mexico had imposed a 20 percent tax on HFCS-sweetened beverages.

The award, announced on Tuesday, is intended to cover lost sales suffered by CP Ingredientes as a result of the tax as well as interest accrued and some out-of-pocket expenses.

Spokesperson for Corn Products International Mark Lindley would not give FoodNavigator-USA.com a detailed reaction from the company regarding the announcement.

“It’s just the way it is,”​ he said.

Mexico’s liability was finally decided in a hearing in July 2006, more than four years after it had first introduced the tax.

Soon after the hearing, the US and Mexico concluded an agreement under which access was granted for American HFCS exports to Mexico.

The tax was not only designed to protect the country's sugar industry, but also to retaliate against US curbs on imports of surplus Mexican sugar after anti-dumping duties introduced in 1998 were declared illegal by the World Trade Organization in an earlier ruling.

Free trade

Free trade in sweeteners between the US and Mexico began on January 1 2008, but the agreement is not without flaws.

Even this month, analysts have criticized the system for allowing Mexico to export too much sugar last year, leaving it in short supply domestically.

Mexico is the only country in the Americas with which the US has free trade in sugar, a situation that has led some US manufacturers to fear shortages and price spikes – although growers have said that there is plenty of sugar available.

In terms of the future of trade in sweeteners between the US and Mexico, Lindley said: “We have facilities in Mexico and we are hopeful that things continue apace.”

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