July 15, 2005

USDA: Mexico's new over-quota import tariff for yellow corn

On July 7, Mexico's Secretariat of Economy (SE) announced in the Mexican Federal Register (Diario Oficial) the new over-quota import tariffs for yellow corn. The 1 percent import tariff will be effective July 8 and will remain in force till December 31.

According to the announcement, the domestic corn supply currently is insufficient to match domestic demand. SE officials stated that the 2005 duty-free corn TRQ (3,461.9 MMT) had already been filled in June 2005. 

On June 24, the SE also published in the Diario Oficial an agreement to determine the requirements for over-quota U.S. yellow corn for 2005, including the conditions for the allocation of out-of-quota yellow corn import permits (cupo). 

The mechanism through which the yellow corn over-quota will be allocated for 2005 will be direct allocation.  The over-quota volume of yellow corn will be granted to interested parties from the starch, cereal, snack food and animal feed industries.

Despite the agreed upon NAFTA-bound tariffs for white and yellow corn, the Mexican government had customarily issued additional import permits beyond the amount required by the free trade agreement. 

Although both correspond to NAFTA-bound tariffs, this decision is a marked departure from past practice, as it means a significant difference between the current bound and the previous applied tariffs. 

The announcement also outlines changes to the cupo allocation process, the most important change is that the percentage of domestic corn that industrial consumers must contractually purchase from Mexican corn growers has increased from 15 to 20 percent of their total corn imports in 2004.

For the full USDA report, click here.