| MEXICO CITY (Dow Jones)--Fresh talks between the U.S. and
Mexico over the size of Mexico's access to U.S. duty-free sugar import
quotas may result in a negotiated solution to the heated dispute, industry
sources said this weekend.
A source close to the negotiating team for Mexico's Commerce Ministry
and local sugar industry said new talks in Washington earlier this month
had been constructive, and there was still hope for a deal to be reached.
Officials in both Mexico and the U.S. have remained tight-lipped about
the outcome and details of the talks over the highly controversial dispute
which started over three years ago.
"The talks went pretty well and the ball is in their (the U.S.')
hands now. The U.S. Trade Representative office is now consulting their
local sweetener industries," said the source, who asked not to be
named.
He said the Mexican team, which was led by Mexico's Deputy Commerce
Minister Luis de la Calle, had been given the impression by the USTR that
there was "some opening available" for Mexico to get an
increased sugar quota.
The U.S. last month allocated 116,000 metric tons to Mexico in
duty-free import quotas for the fiscal 2000/01 harvest cycle which started
Oct. 1, much less than the access Mexico says it is entitled to under the
North American Free Trade Agreement.
But the U.S. has yet to announce the shipping pattern for Mexico's
allocations, and until that is done Mexico has effectively not received
any final quota, traders and sugar industry officials said.
Nafta Dispute Panel To Proceed Despite New Talks
The Commerce Ministry source said the Mexican team traveled to
Washington on an invitation from the U.S., but wouldn't comment on the
details of the latest offer exchanged between the two sides.
Last month Mexico's Commerce Ministry requested a Nafta Chapter 20
dispute panel to resolve the controversial case following the Mexican
sugar chamber's rejection of the last U.S. proposal to resolve the issue,
which Mexico said was "one-sided" and only took into account
U.S. interests.
While U.S. officials took Mexico's request for the dispute panel as a
sign that talks had broken down, Mexico has said talks could continue if
the U.S. came up with "an acceptable offer" to resolve the row.
In a Chapter 20 Nafta dispute panel, Mexico will challenge the legality
of a sideletter agreement which was signed after the conclusion of the
negotiations of the Nafta sugar chapter. Two different versions of the
letter were signed and Mexico says the sideletter limiting its access was
never legally approved.
Instead, Mexico will seek to have the original Nafta text implemented,
which gives Mexico the right to export its entire "surplus
production," about 575,000 tons in the 99/00 harvest, but which has
been as high as 1.2 million tons in the record 1997/98 cycle.
The Commerce Ministry source said despite the renewed talks, however,
the Chapter 20 dispute panel will continue under Nafta as long as no
solution to the row was negotiated.
But he stressed it should be taken as a sign of encouragement that
talks were now continuing, demonstrating the will of both the U.S. and
Mexican governments to reach a deal.
"Basically, this last meeting brings the talks back on track, and
parallel to the talks the Chapter 20 dispute panel will also continue. But
we still hope we can reach an agreement," he told Dow Jones
Newswires.
While the U.S. has claimed the validity of the sideletter agreement
cannot be called into dispute, it has not come forward with any documents
showing Mexico signed the agreement limiting its quotas.
Mexico's sugar industry maintains its demands for a minimum quota of
350,000 tons plus an amount equal kilogram-per-kilogram to the amount of
the sweetener high fructose corn syrup being imported from the U.S. to
Mexico.
But Mexico may be willing to accept part of that minimum quota paid in
a cash compensation, a possibility earlier offered by the U.S. as part of
a resolution, according to sources involved in the talks.
The U.S. sugar industry has opposed the original text, fearing Mexico
would flood its sweetener market with more sugar and add to the pressure
which has pushed the domestic U.S. sugar price to a 22-year low. |