California's Wine Institute is hopeful that winemakers can make up lost ground in Mexico after the country agreed to drop the remnants of a 20% import tariff on US wines.

Mexico has abolished the tariff following a deal with the US Government to re-establish a permit system for Mexican trucks crossing into the US. Half of the 20% tariff was eliminated in July and the remainder has been dropped as of this month, the Wine Institute said late last week.

Imposed in 2009 as part of a trucking dispute with the US, the higher taxes on US wine imports appear to have damaged sales in Mexico. US wine exports to Mexico fell by 26% in the first eight months of 2011, according to Institute figures.

In 2010, Mexico was the 11th biggest export market for US wine with shipments valued at US$18.4m, albeit versus $23.8m back in 2007. The Institute's international marketing director, Linsey Gallagher, is hopeful that exports will now rebound. 

"With two trade setbacks in the last several years, many wineries shifted their promotional resources to more predictable high-growth markets," said Gallagher. "However, with the tariff elimination and since our countries have been strong trading partners and share a common border, we hope to significantly expand California wine exports to Mexico.

Around 90% of the US' total wine exports come from California.