Cargill vs. Mexico: When the defense of national industry costs millions
Photo By Steven Vance / CC BY-NC-SA 2.0
  • Amount demanded: US$124 million
  • Outcome: US$77 million (+ US$13 million interest)
  • Treaty invoked: NAFTA
  • Sector: food
  • Issues: health, tax

by Public Citizen

Cargill, the largest privately-held corporation in the United States and a producer of high fructose corn syrup (HFCS), challenged the same Mexican tax on HCFS described in the Corn Products International (CPI) and Archer Daniels Midland (ADM) cases above. The tax was levied on beverages sweetened with HFCS, but not those sweetened with cane sugar. As in the CPI and ADM cases, Mexico argued that the tax, which impeded U.S. exports of HFCS to Mexico, was legitimate as a counter to the U.S. refusal to open its market to Mexican cane sugar as stipulated by NAFTA. The tax also helped safeguard the Mexican cane sugar industry, consisting of hundreds of thousands of jobs, from the post-NAFTA influx of U.S.-subsidized HFCS that threatened those jobs. Cargill asserted that Mexico’s HFCS tax violated NAFTA’s obligations concerning national treatment, most favoured nation treatment, expropriation, fair and equitable treatment and performance standards.

A tribunal ruled in favour of Cargill, awarding $77.3 million, the largest award to date in an investor-state dispute brought under a U.S. FTA. In addition, the tribunal ordered Mexico to pay for the tribunal’s costs and half of Cargill’s own legal fees. The tribunal decided that U.S. agribusiness giant Cargill and Mexican sugar producers were “in like circumstances” and that the HFSC-only tax thus discriminated against Cargill, even though it also applied to Mexican HFCS producers. The tribunal further declared that the tax amounted to a NAFTA- banned performance requirement and a violation of Cargill’s right to fair and equitable treatment.

last update: April 2021

source: Public Citizen