Sweet WTO Ruling on Sugar Taxes

October 7, 2005

The World Trade Organization has ruled in favor of a U.S. claim that Mexico is unfairly taxing American products containing certain kinds of sugar. As Yahoo News reports:

The United States claimed victory at the World Trade Organization in a dispute over Mexico’s tax on soft drinks with imported sweeteners, which Washington said is an unfair trade barrier.

US Trade Representative Rob Portman said a WTO panel sided with the US position that tax of 20 percent violated global trading rules.

“This is an important win for our industry. The WTO panel could not have been clearer: Mexico’s beverage tax is discriminatory and contrary to WTO rules,” said Portman.

Mexico imposed the tax in 2002 on soft drinks and other beverages, as well as on syrups that use any sweetener other than cane sugar. It results in a tax on most US drinks made with high-fructose corn syrup (HFCS) or beet sugar.

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Any policy that eliminates discriminatory taxes designed to favor some industries and companies at the expense of others is a good one. However, an even better policy would be for the U.S. government to be consistent on this issue and eliminate its own subsidies for domestic sugar producers and tariffs and quotas it imposes on foreign sugar — policies that cost American consumers nearly $2 billion each year according to a GAO Study.

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