Mexico & Nafta - 14 September 2004

TRADE: The Byrd amendment, which allowed US companies to apply to have competing products from foreign companies subjected to extra tariffs, was outlawed by the World Trade Organization on 31 August. The US provision was named after its proponent, Senator Robert Byrd. His amendment allowed the US companies which denounced their foreign competitors to share in the revenues generated by the tariffs. The WTO decision allows countries that have been affected by the US provision to levy compensating tariffs on the US companies which denounced their companies. The states and organisations which can now do this are: the European Union, Brazil, Canada, Chile, Korea, India, Japan and Mexico.

RUBBER BULLETS: The use by US law enforcement agencies of rubber bullets against migrants has become an issue in Mexico. The Mexican congress said that the use of even non-lethal weapons against Mexican migrants had been banned under a 2001 agreement between the two countries. Congress questioned the interior minister, Santiago Creel, about the use of rubber bullets by US law enforcement officers. Creel said that the agreement he had made with the US neither explicitly nor implicitly allowed US officials to use rubber bullets against undocumented migrants. What the agreement did do, he said, was to limit the use of firearms by the US Border Patrol.

FRUCTOSE: Mexico's maize producers are lobbying to have the discriminatory tax against drinks sweetened with high-fructose corn syrup overturned. This tax, which is part of the Ieps (a list of special taxes on products) taxes soft drinks sweetened with fructose at 20%. Soft drinks sweetened with sugar do not face the tax. The maize growers have approached the Confederación Nacional Campesina to lobby the government and congress over the issue. As the budget for 2005 will go through congress before the end of the year, the fructose issue could flare up. Most budgets have a tax miscellany attached to them. In this miscellany, congress alters a range of taxes. The government originally imposed the Ieps on fructose in 2002 in an effort to protect the hard-pressed domestic sugar industry. Mexican sugar producers say, rightly, that the government bungled their interests when it negotiated Nafta, which came into force in 1994. Mexico has a sugar surplus but it is not allowed to export this to the US, thanks to the power of the US sugar-producers' and corn-syrup lobby. Furthermore, the Mexican negotiators did not take specific steps to exclude US corn syrup from the Mexican sweeteners market. The maize growers claim that dropping the 20% tax on corn syrup sweetened soft drinks will add US$50m to maize producers' incomes each year. What they do not say is whether the gain will go to Mexican producers or their US competitors. Big US agribusiness combines, such as Archer Daniels Midland, are far more efficient producers of high-fructose corn syrup than their Mexican competitors. 

TEXTILES: The US textile industry is lobbying its government to protect it from the ending of quotas on textiles and clothing produced in China. Under a 2001 agreement, the US agreed to end quantitative restrictions on imports of textiles from China. The agreement does allow the US textile industry to ask for tariff protection, if there is a surge in imports from China from 2005, when the quota ends. The US industry wants the government to act before the quota ends. 

DRUGS: Mexico's attorney general. General Rafael Macedo de la Concha, said in mid-August that the US should do more to combat drug consumption. This would mean that fewer shipments would then cross Mexico destined for the US. Macedo said that the US and Mexico were working well in combating the drug trade, but he stressed that the US was too heavy on stopping production and transport rather than addressing the issue of drug consumption in the US.