Corn sweetener under world trade panel

- Last updated on GMT

Related tags: High-fructose corn syrup

After months of unsuccessful talks, the US yesterday successfully
secured a World Trade Organisation panel to investigate its claim
that the Mexican 'discretionary tax' introduced for corn sweeteners
such as high fructose syrups in soft drinks violates international
trade rules.

The US claims these tax measures, introduced in January 2002, discriminate against beverages and syrups made with any sweetener other than cane sugar.

High fructose syrups, known as isoglucose in Europe, kicked off in the US in the 1970s when the country developed new technologies to process this bulk calorific sweetener. The ingredient, an alternative to sucrose, rapidly gained in popularity and is now used by the soft drinks giants Coca-Cola and PepsiCo.

But Mexico has introduced a 20 per cent tax on HFCS in order to protect its struggling sugar industry, and to retaliate against US curbs on imports of surplus Mexican sugar after anti-dumping duties introduced in 1998 were declared illegal by the WTO in an earlier ruling.

As such, exports from US suppliers such as Corn Products International and processing giant Archer Daniels Midland (ADM) have been severely hit by the tax on soft drinks and syrups using the HFCS sweetener rather than cane sugar. A 20 per cent tax was also imposed on distribution and other services related to drinks using HFCS.

"Representatives of the corn and sugar industries continue to meet with the Mexican government but the big issues are still on the table. A situation that is frustrating,"​ a spokesperson for Corn Products International recently told FoodNavigator.com​, adding that after months of disappointing talks, the company will welcome the new WTO dispute panel.

US exports of the sweetener fell to $1.5 million (€1.2m) last year compared with $63 million in 1997, according to the US trade representatives' office. According to the US corn refining industry, in 2003 corn sweeteners, sourced from US corn farmers and the leading global corn suppliers, supplied more than 56 per cent of the US nutritive sweetener market.

A decision on the tax could come as soon as the end of the year with a spokesperson for the WTO telling FoodNavigator.com that the normal procedure for the panel decision is around six months.

"The three panelists will be selected very shortly, possibly by the end of next week,"​ said the spokesperson, adding that the expert panelists will be specialists in the market.

Isoglucose use in the EU falls far behind the US, principally due to protectionist policies that seek to secure the EU's sugar regime and control sucrose alternatives, such as isoglucose. This means that isoglucose, also used in canned fruits, condiments, ice cream and frozen desserts, is entitled to only a small niche market.

Leading isoglucose suppliers in Europe are Amylum, the number one isoglucose player and a subsidiary of UK sugar giant Tate & Lyle, and US agri-titan Cargill.

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