US to Challenge Mexico Corn Ban

Mexico intends to defend its policy of limiting imports of GMO corn into the food system, citing health, environmental and cultural concerns.

In late 2020, the Mexican government announced its intention to ban the import of GMO corn. The announcement sparked an ongoing trade dispute between the United States and Mexico, which imports $5 billion worth of American corn each year. Exports of corn to Mexico represented around 5 percent of the 2022 US corn production.

In February of this year, the Mexican government rolled back the ban to limit only white corn, which is used for human consumption, and allow the import of yellow corn, which is primarily used as animal feed. 

Current negotiations over the white corn ban have stalled, and the U.S. has formally begun the challenge process under USMCA, the trade agreement that replaced NAFTA in 2020. 

The U.S. announced its intention to challenge the ban under the Sanitary and Phytosanitary Measures of USMCA, arguing that Mexico is violating its commitment to ensure measures are “based on relevant scientific principles…” (Article 9.6.6(b)), and an “…approval procedure that requires a risk assessment…” If negotiators do not reach a resolution in 75 days, the dispute can move to a settlement panel.

Given the small volumes of white corn that are imported by Mexico from the United States each year, the impact of the current policy should be low.

While the dispute is over a single product in the vast USMCA trade agreement, U.S. federal trade officials believe upholding the ban on white corn could undermine confidence in the validity of the entire trade package. The potential for a resulting tariff war across the spectrum of traded goods between the United States and Mexico is expected to keep the relationship uncomfortable until the dispute is resolved.

For Market to Market, I'm Peter Tubbs.