In recent news, US President Donald Trump requested cane sugar-sweetened Coca-Cola. This highlights broader trade relations issues between Mexico and the US: the soft drinks battle over soft drinks.
The single aspect of this is that Mexican Coca-Cola is sweetened with cane sugar. On the other side of the Rio Bravo or Rio Grande (depending on the side of the border you are), the US Coca-Cola is sweetened with corn syrup. According to some news outlets, Mexican Coke tastes better due to the use of sugar cane as a sweetener. This could be debatable, yet, President Donald Trump requested US Coca-Cola to make cane sugar-sweetened Coke.
Behind this seemingly inoffensive battle about which Coke tastes better lies a broader trade battle between these two neighboring countries. It all started with Mexico, which in 2004 imposed a 20% tax measure on all soft drinks sweetened with other sweeteners except cane sugar. Due to such measures, the US started consultations before the WTO in Geneva. During these consultations, the US claimed that Mexico was discriminating against the soft drinks industry. By imposing internal taxes, Mexico was in violation of the National Treatment of Article III:2. Such taxes were discriminatory, being less favorable to like products.
In essence, a Mexican Coke was cheaper to a US Coke due to the sweetener base. It should be noted that Mexico also claimed that such a measure was not in itself discriminatory, but rather aimed to protect human health, as some studies suggested that sweeteners based on corn syrup were harmful to human health. However, the WTO Dispute Settlement Body (DSB) rejected this claim. Soon after, the matter was dealt with by the WTO Appellate Body.
The circumstances before the DSB differed slightly. Mexico argued that the WTO DSB and the WTO AB lacked jurisdiction because there was a parallel claim pending resolution on the same facts under NAFTA. However, the AB rejected such a claim, confirming that it had jurisdiction to rule on the question despite the existence of a trade agreement between the two countries.
Following the WTO’s finding, Mexico was required to reverse its internal tax on soft drinks sweetened with alternative sweeteners. This was made on January 1st, 2007. Despite this situation, Mexican Coke was still made with cane sugar. Many other brands of soft drinks were made with alternative sweeteners, however.
It appears that the White House prefers cane sugar-sweetened drinks, which may be indicative of a perceived better taste or a preference for one type of sweetener over another.
