With the signing of the North American Free Trade Agreement (NAFTA) in 1994, owners of sugar mills in Mexico expected they would be able to export an estimated 500,000 tons of excess sugar tariff-free to the United States. But Washington unilaterally imposed a "side letter" to the "free-trade" act to protect the U.S. sugar manufactures. The protectionist measure, which was criticized last September by the Mexican government, has limited sugar exports to the U.S. to 116,000 tons a year.  
 
Lucrative business
At the same time, U.S. companies shipped some 1.3 million tons of corn-derived fructose into Mexico between 1994 and the end of 2000. In the last year alone U.S.-based Archer Daniels Midland and Corn Products International sold a total of 475,000 metric tons, worth $240 million, to bottling companies in Mexico. Corn Products had established four plants in Mexico to take advantage of the lucrative market.

Mexico's sugar industry, which employs close to half a million workers, including small cane growers, mill workers and truck drivers, is vital to the economy of 227 municipalities in 15 states. The flooding of the Mexican market with the cheaper corn sweetener threatened the sugar industry with collapse.

As the crisis deepened the mills stopped paying peasants for cane they had already delivered. The bosses blamed their inability to export sugar and the declining national market on the rising imports from the north.

Last year, sugar cane workers and peasant growers began to organize marches and rallies in front of government buildings. They threatened to shut down ports and highways, demanding payment for their crops and government protection from the effects of unequal competition and low prices in the international market.

In September the Mexican government carried out a multibillion dollar bailout of 27 sugar mills in order to rescue capitalist investors and stave off the growing protests.

"Given the economic situation of the country, it was more important to maintain the industry, which is a large source of employment," said Mexican sugar baron Rodolfo Perdomo Bueno to the New York Times last December. "We would be talking about an uprising in 15 different states" if it were to collapse, he said.

A town official from Córdoba, in the state of Veracruz, said that if the United States refuses to buy Mexico's sugar surplus "they'll have to accept more Mexicans crossing the border."  
 
U.S. producer closes Mexican plant
Faced with the unexpected tax and a resulting decline in orders, Corn Products said it would suspend operations of one of its plants in Mexico. The company's shares dropped almost 10 percent on the New York Stock Exchange.

U.S. trade representative spokesperson Richard Mills said on January 14 that "our initial reaction is very negative.... Mexico must end this discriminatory treatment of soft drinks made with corn syrup."

Kyd Brenner, the acting director of the Corn Refiners Association, said that many in the capitalist outfit were "shocked" at the "sudden and dramatic taking of a market."

The U.S. government had earlier won a ruling in the World Trade Organization against a 1997 import duty on corn syrup imposed by the Mexican government. A few weeks prior to the Mexican Congress's latest decision, U.S. government officials had said they would not seek sanctions against Mexico in the earlier case, claiming they would seek to negotiate instead. "This [tax] rejects the good faith step the U.S. took last month," said Mills. Representatives for sugar monopolies in the U.S. have threatened that they may retaliate against the latest measure.  
 
Divisions in Mexican ruling class
There are also divisions in the Mexican ruling class over how to proceed. Deputies from Mexico's former-ruling Institutional Revolutionary Party, which backed the measure, followed it with full-page ads boasting of their efforts to protect the sugar industry.

Arturo Hervis Reyes, a congressman from the opposition Democratic Revolution Party, said the "fundamental idea of the tax isn't so much to create tax revenue, but to promote the consumption of the nation's sugar. It is a protectionist measure."

Fearful of the impact of the measure on trade relations with the United States, on the other hand, Mexican president Vicente Fox responded unfavorably to the tax, and has announced he will send his finance minister to meet with U.S. officials to discuss the issue.

Jack Rodney from the American Sugar Alliance summed up the imperialists' attitude when he told the Times, "It's none of our business how Mexico sorts out its social and economic issues. The part we are concerned about continues to be the surplus sugar--and that we not be expected to pay the price for those problems."  
 
 
Front page (for this issue) | Home | Text-version home