The long-running dispute between the US and Mexico over high fructose corn syrup (HFCS), used as a sweetener for soft drinks, looks set to continue as the Mexican Supreme Court ruled last week to re-establish a 20% tax on soft drinks that use the corn-based sweetener.

The law was introduced at the beginning of the year to protect Mexican sugar producers who said they were losing business with Mexican soft drinks producers to cheaper US-imported corn syrup. The measure was also designed to put pressure on the US to allow greater access to the US market for Mexican sugar producers.

Although President Vicente Fox revoked the law by presidential decree in March, the Mexican Supreme Court last week threw out the decree on the grounds that it was unconstitutional. Fox's intervention was more of a stop-gap measure made in the hope that it would give trade officials sufficient time to negotiate a solution.

Observers therefore believe the ruling means there is little hope of an early settlement of the dispute. "In the end this will again complicate trade relations with the United States," said Cesar Casto of the Mexico City-based analysts, CAPEM.
 
"We are very disappointed by the Mexican Supreme Court Ruling, which will restore a protectionist and discriminatory tax on beverages sweetened with high fructose corn syrup," the US Trade Representative said in a statement on Friday 12 July when the ruling was announced. "We appreciate the previous efforts the Fox Administration made to suspend the tax and live up to its international legal commitments. We will make clear our strong concerns with the Fox administration. Today's court action makes it more imperative for the Mexican government to end its unjustified discrimination against HFCS. It is in the interest of all segments of the US and Mexican sweetener industries to negotiate a resolution to this dispute. Today's action by the Mexican Supreme Court makes such efforts more difficult."