MEXICO – TAX MEASURES ON SOFT DRINKS AND OTHER BEVERAGES
Document: Request for the Establishment of a Panel by the United States
Date: 11 June 2004
Document codes: WT/DS308/4
Complainant: U.S.
Respondent: Mexico
Third parties: Canada, China, EU, Guatemala, Japan
Dispute stage: Appellate Body
Agreements cited: Art. III  GATT 1994

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 products. Beverages and syrups sweetened only with
cane sugar, and services related to their transfer, 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
Reforman, Adicionan y Derogan Diversas Disposiciones de la Ley Del Impuesto Al Valor Agregado, de la Ley
(31 Dec. 2003).

 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 second sentences, and Article III:4 of the GATT 1994.

 On 16 March 2004, the United States requested c onsultations with the Government 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.