California Wine Export Program

Mexico Expected to Impose Tariff on US Wine

The Mexican government is expected impose a retaliatory tariff on all US wine imports as a result of the WTO decision regarding the Byrd Amendment. We recommend that all exporters make contingency plans with their importers and customers in Mexico. The start date could be as soon as July 8th.

The imposition of the tariff has been authorized by the World Trade Organization and concerns a long running-trade dispute involving the US and a number of other WTO members.

Brazil, Chile, India, Japan, Mexico and South Korea have indicated they will apply retaliatory tariffs by July 2005. However, aside from Mexico, these countries have not included tariffs on US wine on their retaliation lists.

The EU and Canada have announced their intention to retaliate against US products but wine is also not included in the EU or Canadian retaliation lists.

The Continued Dumping and Subsidy Offset Act of 2000 (known as the Byrd Amendment) allows US companies who support petitions for anti-dumping and/or countervailing duty investigations against foreign competitors to receive the duties collected as a result of the anti-dumping and/or countervailing duty orders.

In January 2003, eleven WTO members (Australia, Brazil, Canada, Chile, the European Union, India, Indonesia, Japan, Mexico, South Korea and Thailand) successfully challenged the Byrd Amendment as a violation of US obligations under the WTO Agreements on subsidies/countervailing duties and anti-dumping.

A WTO arbitrator gave the United States 11 months (until December 27, 2003) to bring its measure into compliance. The United States has not repealed the Byrd Amendment.

On January 26, 2004, Brazil, Canada, Chile, the European Union, India, Japan, Mexico and South Korea requested authorization from the WTO to retaliate against the US. The US objected to the requests, and the level of retaliation was referred to arbitration. The arbitration process lasted seven months.

On August 31, 2004, the WTO Arbitrator ruled that the eight countries listed above could retaliate against the United States by up to 72 percent of the annual level of anti-dumping and countervailing duties on their respective exports disbursed to US companies.