U.S./Mexico border battle brews over tequila
A Mexican proposal requiring tequila to be exported in bottles rather than in bulk could significantly raise prices and create shortages of a key ingredient in popular mixed drinks, U.S. liquor importers say.
The Mexican Bureau of Standards is supposed to reach a final decision later this year on whether to ban bulk shipments of tequila to the United States beginning Jan. 1. The rule is a quality-control measure to protect Mexican producers from losing business and their brand reputation to knockoff products that are not 100-percent pure tequila, said Hector Marquez, director of the trade office at the Mexican Embassy in Washington, in an interview.
'Once it is sold as bulk, we don't have enough control to determine whether the product is tequila,' he said.
Last year, 83 percent of tequila imports from Mexico were shipped in bulk at a value of $214 million, according to the U.S. Distilled Spirits Council. More than half of Mexico's total tequila production is exported to the United States.
The trade group said banning U.S. companies from bottling the tequila themselves violates Mexico's obligations under the North American Free Trade Agreement and the World Trade Organization. The quality issue is a 'smokescreen' for protectionism, said Frank Coleman, spokesman for the Distilled Spirits Council.
The bulk ban 'will have a devastating effect on both U.S. and the Mexican spirit industries. It will damage existing brands, drive companies out of business and cost jobs on both sides of the border,' council president Peter Cressy said in a statement.
The council said it is working closely with the U.S. government to overturn the regulation.
Marquez encouraged U.S. distributors to participate in Ministry of Economy consultations scheduled during informal and formal comment periods over the next several weeks. Mexico's decision to invoke the rule will be largely influenced by what steps the U.S. government is willing to do to help protect Mexican brand origins, he said.