United States Trade Representative Susan C. Schwab on Friday applauded
Mexico's repeal of the 20-percent tax on soft drinks made with non-sugar
sweeteners, ending a long-running trade dispute between Washington and
Mexico City.

Schwab said that the repeal, which took effect Jan. 1, "will help ensure a
smooth transition to full implementation of the [North American Free Trade
Agreement on Jan. 1, 2008, and benefit sweetener industries on both sides
of the border."

In 2002, Mexico had applied a beverage tax that discriminated against U.S.
high-fructose corn syrup and soft drinks and syrups made with sweeteners as
a way of protecting cane sugar farmers. The 20-percent tax also was applied
to services used for transferring soft drinks and syrups, such as
distribution services, and it subjected taxed products to several
bookkeeping and reporting requirements.

Soft drinks and syrups sweetened exclusively with cane sugar were exempt
from the tax.

At the request of the United States, the World Trade Organization
established a dispute settlement panel in 2004, which found in favor of the
U.S. On March 6 of this year, the WTO Appellate Body upheld the panel's
findings. The United States and Mexico then agreed on a Jan. 1 deadline for
Mexico to bring the beverage tax into conformity with its WTO obligations.

The government of new Mexican President Felipe Calderon has already
announced plans to implement a controversial five-percent tax on sales of
all soft drinks to replace the sweetener tax.

Mexico is one of the world's biggest soda markets.