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A. LE FLOCH
Mexico will end taxation of U.S. sugar Jan. 1, 2007, and the U.S. will open its borders to Mexican sugar a year later, officials said.
The Bush administration is determined to follow the NAFTA agreement provision to open up the United States to unlimited imports of sugar from Mexico on Jan. 1, 2008, even if it means the U.S. sugar program could not be operated on a "no-cost" basis, Agriculture Undersecretary for Farm and Foreign Agricultural Services J.B. Penn told the Senate Agriculture Committee Wednesday.
Penn said the Bush administration would not want to delay the complete liberalization of the sugar market in the two countries because that would require reopening NAFTA.
Conflicts between the U.S. and Mexican governments have arisen over imports and exports of sugar and high fructose corn syrup because the NAFTA agreement included side letters on sugar that were interpreted differently by the two countries.
Mexico has placed a tax on soft drinks containing high fructose corn syrup that has kept out the product but the Mexican government has promised that it will remove the tax on Jan. 1, 2007, to comply with a World Trade Organization ruling that the tax violated WTO principles. But rumors have been circulating that the Mexican sugar industry may encourage the government to find another tax or way to keep out the high fructose corn syrup, but Penn declined to comment on what the Bush administration would do if Mexico establishes another barrier.
When the restrictions on Mexican sugar end, the U.S. program should be changed, Penn said. The current program is based on protective tariff and a floor price, which often forces industrial users to pay higher-than-market prices for sugar. Sweetener users such as soft drink and candy companies have privately suggested Congress establish a support program similar to other crops, but the American Sugar Alliance, which represents the growers, has said other farmers do not want to give up a portion of their subsidy money to establish a sugar program.