[Congressional Record (Bound Edition), Volume 148 (2002), Part 1]
[Senate]
[Pages 940-941]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        HIGH FRUCTOSE CORN SYRUP

  Mr. GRASSLEY. Mr. President, I rise to speak to my colleagues about 
our trade policy with Mexico and a very specific dispute we have with 
them, a dispute that affects agriculture, definitely, and, within 
agriculture, the production of corn.
  Few trade policy developments in recent years have been more 
significant for the United States than our flourishing economic 
partnership with Mexico, a partnership that results from trade 
agreements that have been worked out and are working very well for both 
countries. The comprehensive free trade agreement, in which we both 
participate and which has contributed so much to the prosperity and 
economic freedom in both countries, stands as a model of hemispheric 
cooperation.
  I am greatly troubled by a recent Mexican action that targets the 
corn-refining industry. I fear this may disrupt and even seriously 
damage our bilateral trade relations.
  On January 1 of this year, Mexico, through congressional action--
meaning their Congress--imposed a totally unwarranted discriminatory 
tax of from 10 to 20 percent on soft drinks sweetened with high 
fructose corn syrup. The United States is a major supplier of high 
fructose corn syrup. We export it directly to Mexico, and it is 
produced in Mexico by wholly owned subsidiaries of U.S. firms. These 
companies have invested hundreds of millions of dollars in Mexico, 
providing many jobs to Mexican workers.
  Much of the corn used to produce high fructose corn syrup is grown in 
my own State of Iowa. We are No. 1 of the 50 States in the production 
of corn, as well as soybeans.
  I do not like to attribute bad motives to my neighbors, including 
Mexico, but we do not do these sorts of retaliatory things like are 
being done in Mexico. So I don't suppose I should attribute bad motives 
to my neighbors because we don't do that to our neighbors in Iowa. 
Obviously, I don't like to do it to a country with which we share a 
hemisphere and a rich cultural heritage, considering the fact that such 
a high percentage of the American population is Hispanic.
  I want to get back to strictly the facts. The fact is that Mexico 
applies this new tax only to soft drinks containing high fructose corn 
syrup, not soft drinks containing sweetener from cane sugar. Cane sugar 
is something that Mexico produces in great abundance. Those soft drinks 
are exempt from this tax that is applied just to soft drinks made with 
high fructose corn syrup.
  In my judgment, this discriminatory application of the tax clearly 
violates Mexico's World Trade Organization national treatment 
obligations. If the Mexican tax stays on the books for the rest of the 
year, the corn growers and corn refiners in Iowa and throughout the 
United States are going to be badly hurt. I fear that some of them may 
have income and their income will go down and, obviously, will 
jeopardize their farms and at least their livelihoods.
  Now, estimates are that corn refiners will lose about $244 million 
just this year alone. Our farmers will lose another $66 million in the 
sale of corn. As surplus high fructose corn syrup production mounts, 
other losses will pile up as well.
  So even though President Vicente Fox brings progressive political 
leadership to Mexico--a leadership that I greatly admire and respect--
it looks as if some nonprogressive members of the Mexican Congress are 
still employing the old, tired politics of the past, the old politics 
of protectionism.
  The Mexican congressional motto is: If you can't compete fairly or 
efficiently, try to muscle your competition out of the market. This is 
just the sort of ``beggar thy neighbor'' trade policy of the past that 
we have worked so hard to overcome, both with the creation of the North 
American Free Trade Agreement and with the creation of the World Trade 
Organization.
  So it is very discouraging, then, just as we start the real work on a 
new round of World Trade Organization trade negotiations, in which we 
hope to further liberalize world trade, and especially trade in 
agricultural products, to

[[Page 941]]

suddenly find ourselves fighting a harmful protectionist measure 
imposed by one of our closest neighbors and trading partners, and a 
neighbor that we want to call ``friend.''
  Currently, Mexico is our third largest agricultural export market. 
This market grew an astounding 15 percent just last year. If the 
present trade continues, Mexico will probably surpass Canada as our 
second largest agricultural market within 2 or 3 years.
  I know this robust growth in competitive agricultural exports has 
caused some friction between our two countries, but we cannot and must 
not handle our differences by resorting to the ``beggar thy neighbor'' 
policies of the past.
  One response to Mexico's unfair and illegal tax on high-fructose corn 
syrup would be to enact a similar tax on a Mexican product, the drink 
referred to as Mezcal. So far, I have not pursued this sort of 
retaliation. I still hope that Mexico will respect its international 
trade commitments and repeal this legislation, and repeal it 
permanently.
  Mr. President, let me make this very clear. I think it is legitimate 
that my patience and the patience of the agricultural interests in the 
United States is limited. It ought to be that way.
  Minister Luis Derbez, who is Mexico's secretary of the economy, 
stated that his government is committed to resolving this issue by 
February 15. That is this week. I accept Minister Derbez's word, but 
now is the time for the congressmen and the ministers of the cabinet of 
Mexico to resolve this issue, before we do any more damage to America's 
hard-working farming families and our trade relations with our friend, 
the country of Mexico.
  I yield the floor and suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. REID. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mrs. Lincoln). Without objection, it is so 
ordered.

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