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WASHINGTON - A proposed Mexican regulation banning bulk exports of Tequila and requiring all bottling to occur south of the border is a violation of Mexico's treaty obligations under the North American Free Trade Agreement (NAFTA) and World Trade Organization (WTO), the Distilled Spirits Council of the United States here charged on Wednesday.
"This ill-conceived action is a violation of Mexico's NAFTA and WTO treaty obligations," said Peter Cressy, DISCUS president. "It will have a devastating effect on both U.S. and Mexican spirits industries. It will damage existing brands, drive companies out of business, and cost jobs on both sides of the border."
The Mexican Bureau of Standards (DGN) rule, scheduled to go into effect on Jan. 1, 2004, would prohibit the sale of Tequila not bottled in one of five Mexican states comprising the Tequila region. In 2002, 83 percent of Tequila imported into the U.S. was shipped in bulk form and could no longer be sold under the ban.
"This proposal could have a grave effect on consumers worldwide through higher prices, fewer choices, and the significant potential for serious product shortages," Cressy said. More than half of Mexico's total Tequila production was exported to the U.S., including $214 million in bulk Tequila.
"Under the present system, the popularity of Tequila has increased dramatically, with Tequila becoming America's fastest growing spirit product," he said. "This misguided proposal is a dangerous threat to Tequila's continued success."
DISCUS is working closely with the U.S. Government to overturn the regulation.