Mexico - Tax Measures on Soft Drinks and Other Beverages
Law and Practice of International Trade
Case-note
DISPUTE SETTLEMENT: DISPUTE DS308
Mexico - Tax Measures on Soft Drinks and Other Beverages
The Mexico- Soft drinks case was an important case based on the sweetener’s trade market in North America. This case note will try to summarize the facts of the case in order to analyze the issues raised by it. Following, we try to expose the reasons why Mexico decided to implement tax measures as a response to the United State’s refusal to submit their dispute to the North American Free Trade Agreement (NAFTA) dispute settlement panel. And last, give a brief opinion on the issues and the way they were upheld along the case.
Since January 2002, Mexico imposed a twenty percent tax on the sale and distribution of soft drinks and other beverages that used any sweetener other than cane sugar, including, and specially, high fructose corn syrup (HFCS). The United States is the primary supplier of almost all the HFCS used to sweeten beverages in Mexico, and on the other hand all the beverages sweetened with cane sugar use domestic product.
In March 2004 the United States requested consultations with Mexico regarding Articles 1 and 4 of the DSU and Article XXII of the GATT 1994, with respect to these tax measures imposed by Mexico. And on 10 June 2004, the United States requested the WTO to establish a panel pursuant to Article 6 of the DSU. The United States claimed that Mexico had violated the provisions stated in GATT 1994 Article III.
The Dispute Settlement Body established the Panel on 6 July stating the following, as purpose of the establishment of the panel :
"To examine, in the light of the relevant provisions of the covered agreements cited by the United States in document WT/DS308/4, the matter referred to the DSB by the
United States in that document, and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those
agreements."
Case-note
DISPUTE SETTLEMENT: DISPUTE DS308
Mexico - Tax Measures on Soft Drinks and Other Beverages
The Mexico- Soft drinks case was an important case based on the sweetener’s trade market in North America. This case note will try to summarize the facts of the case in order to analyze the issues raised by it. Following, we try to expose the reasons why Mexico decided to implement tax measures as a response to the United State’s refusal to submit their dispute to the North American Free Trade Agreement (NAFTA) dispute settlement panel. And last, give a brief opinion on the issues and the way they were upheld along the case.
Since January 2002, Mexico imposed a twenty percent tax on the sale and distribution of soft drinks and other beverages that used any sweetener other than cane sugar, including, and specially, high fructose corn syrup (HFCS). The United States is the primary supplier of almost all the HFCS used to sweeten beverages in Mexico, and on the other hand all the beverages sweetened with cane sugar use domestic product.
In March 2004 the United States requested consultations with Mexico regarding Articles 1 and 4 of the DSU and Article XXII of the GATT 1994, with respect to these tax measures imposed by Mexico. And on 10 June 2004, the United States requested the WTO to establish a panel pursuant to Article 6 of the DSU. The United States claimed that Mexico had violated the provisions stated in GATT 1994 Article III.
The Dispute Settlement Body established the Panel on 6 July stating the following, as purpose of the establishment of the panel :
"To examine, in the light of the relevant provisions of the covered agreements cited by the United States in document WT/DS308/4, the matter referred to the DSB by the
United States in that document, and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those
agreements."