. /. WORLD TRADE  
ORGANIZATION   
WT/DS308/4 
11 June 2004  
 
(04-2542) 
 Original:   English 
   
MEXICO – TAX MEASURES ON SOFT DRINKS 
AND OTHER BEVERAGES 
 
Request for the Establishment of a Panel by the United States 
 
 
 The following communication, dated 10 June 2004, from the delegation of the United States 
to the Chairperson of the Dispute Settlement Body, is  circulated pursuant to Article 6.2 of the DSU. 
 
_______________ 
  
The United States considers that certain tax me asures of the Government of Mexico on soft 
drinks and other beverages as well as on syrups, con centrates, powders, essences or extracts that can 
be diluted to produce such products (hereinafter "b everages and syrups") that use any sweetener other 
than cane sugar are inconsistent with Mexi co's commitments and obligations under the General 
Agreement on Tariffs and Trade 1994  ("GATT 1994").  Those measures include: 
 
(1) Law on the Special Tax on Production and Services ( Ley del Impuesto Especial sobre 
Producción y Servicios  or "IEPS") published on 1 January 2002 and its subsequent 
amendments published on 30 December 2002 and 31 December 2003
1; and 
 
(2) any related or implementing measures, including the Reglamento de la Ley del Impesto 
Especial sobre Producción y Servicios published on 15 May 1990, the Resolucion Miscelanea 
Fiscal Para 2004 (Title 6)  published on 30 April 2004, and the Resolucion Miscelanea Fiscal 
Para 2003  (Title 6) published on 31 March 2003 which identify, inter alia , details on the 
scope, calculation, payment and bookkeeping and recording requirements of the IEPS. 
 
 Mexico's tax measures impose a 20 per cent tax on beverages and syrups that use sweeteners 
other than cane sugar.  Mexico's tax measures al so impose a 20 per cent tax on services related to the 
transfer of beverages and syrups, including the commissioning, mediation, agency, representation, 
brokerage, consignment and distribution of such prod ucts.  Beverages and syru ps sweetened only with 
cane sugar, and services related to their tr ansfer, are not subject to these measures. 
 
 Mexico's tax measures also impose severa l bookkeeping and reporting requirements on 
beverages and syrups, and services related to the tr ansfer of such products, that are not similarly 
imposed on beverages and syrups sweetened only w ith cane sugar, or on services related to the 
transfer of beverages and syrups  sweetened only with cane sugar. 
 
                                                      
1 Ley del Impuesto Especial sobre Producción y Servicios  (1 Jan. 2002); Se Reforman Y Adicionan 
Diversas Diposiciones de la Ley del Impuesto Especial sobre Producción y Servicios , (30 Dec. 2002); Se 
Reforman, Adicionan y Derogan Diversas Disposiciones de la Ley Del Impuesto Al Valor Agregado, de la Ley 
Del Impuesto Sobre La Renta, de la Ley Del Impuesto Especial Sobre Produccióny y Servicios, de la Ley Del 
Impuesto Sobre Tenencia o Uso De Vehículos, de la Ley Federal Del Impuesto Sobre Automóviles Nuevos y de la Ley Federal De Derechos  (31 Dec. 2003); Ley del Impuesto Especial sobre Producción y Servicios  
(31 Dec. 2003). WT/DS308/4 
Page 2  
 
 The United States considers that Mexico's tax measures discriminate against imported sweeteners other than cane sugar (including high -fructose corn syrup ("HFCS")), and imported 
beverages and syrups made with such sweetener s, because Mexico's tax measures do not apply to 
cane sugar, or beverages and syr ups made solely with cane sugar.  The United States considers 
imported sweeteners other than cane sugar, and im ported beverages and syr ups made with such 
sweeteners, including HFCS and beverages and syr ups made with HFCS, to be like and directly 
competitive or substitutable with Mexican cane suga r and beverages and syrups made with Mexican 
cane sugar.   The United States considers that Mexico's ta x measures are inconsistent with Mexico's 
obligations under Article III of the GATT 1994.  In pa rticular, Mexico's tax measures appear to be 
inconsistent with Article III:2, first and sec ond sentences, and Article III:4 of the GATT 1994.  
  On 16 March 2004, the United States requested c onsultations with the G overnment of Mexico 
pursuant to Articles 1 and 4 of the Understanding on Rules and Procedures Governing the Settlement 
of Disputes  ("DSU") and Article XXII:1 of the GA TT 1994 concerning Mexico's tax measures on 
beverages and syrups, and services related to the tr ansfer of such products.  The United States held 
consultations with Mexico on these measures in Geneva on 13 May 2004.  Unfortunately, these 
consultations did not resolve the dispute.   
Accordingly, the United States respectfully requ ests the Dispute Settlement Body to establish 
a panel pursuant to Article 6 of the DSU to examine this matter with standard terms of reference as set 
out in Article 7.1 of the DSU.  
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