The Government of Mexico issued a decree this Monday modifying the Tariff of the Law on General Taxes on Import and Export, in order to increase tariffs on sugar by between 156% and up to 210.44% ad-valorem (according to value).
The document, published in Monday's evening edition of the Official Gazette of the Federation (DOF), states that «the current import tariff for sugar, under the most-favored-nation treatment, does not provide sufficient protection to the national agribusiness in the face of falling international prices».
It specifies that as of this Tuesday, it will impose tariffs on sugar imports originating from member countries of the World Trade Organization (WTO), except for those with which it has agreed on an opening in trade agreements.
The document indicates that the Federal Government «has the obligation to implement the necessary mechanisms that generate stability in the sectors of the national industry and that allow eliminating distortions in trade», to safeguard the balance of the global market in accordance with international law and the international commitments acquired by our country.
It also mentions that «the agribusiness of sugarcane in Mexico is facing a situation of oversupply of sugar in the national market that is putting at risk the profitability and viability of the entire productive chain».
It also indicates that «the current import tariff for sugar, under the most-favored-nation treatment, currently does not provide sufficient protection to the national agibusiness given the fall in international prices of this product».
In light of this, the federal government published in the DOF the aforementioned decree that points out as necessary «to modify the specific tariffs applicable from 0.36, 0.338, and 0.39586 dollars per kilogram (US dollars per kilogram) to 156% and 210.44% ad-valorem (according to the value) declared of the good in customs that includes cost, insurance, and freight».
The document also specifies that for liquid refined sugar and inverted sugar products, the import tariff will be 210.44% per kilogram, and for beet sugar with the addition of a flavoring or coloring agent, with a sugar content equal to or greater than 90% by weight, flavored syrups or with the addition of colorants, they will have a tariff of 156% per kilogram.
In mid-October of last year, the Mexican government announced an agreement with the sugary beverage industry that includes a 30% reduction in the sugar content in soft drinks, restrictions on advertising aimed at minors, and a price differentiation between sugary and calorie-free beverages, in exchange for moderating the increase in the special tax (IEPS) originally proposed.
The agreement was to maintain the IEPS at 3.08 pesos (0.17 dollars) per liter for sugary drinks, but the calorie-free versions will pay 1.50 pesos (0.081 dollars).
Mexico is one of the largest consumers of soft drinks in the world, with an average of 166 liters per person per year, according to official data.
The consumption of sugary drinks is linked to the high prevalence of obesity and type 2 diabetes, the main causes of death in the country.
