Tuesday, February 6, 2007

Mexico's Corn Tariff

http://find.galegroup.com/itx/tab.do?subjectParam=Locale%2528en%252C%252C%2529%253AFQE%253D%2528su%252CNone%252C6%2529Mexico%253AAnd%253ALQE%253D%2528JN%252CNone%252C9%2529Economist%2524&qrySerId=Locale%28en%2C%2C%29%3AFQE%3D%28ke%2CNone%2C6%29Mexico%3AAnd%3ALQE%3D%28JN%2CNone%2C9%29Economist%24&sgHitCountType=None&inPS=true&sort=DateDescend&tabID=T003&sgCurrentPosition=0&subjectAction=DISPLAY_SUBJECTS&prodId=EAIM&searchId=R1&displaySubject=&userGroupName=beloit_main&prevSubject=&searchType=AdvancedSearchForm

Behind this (admittedly unseemly) link, there is the full text of a recent article in the Economist about a price spike in corn (which the British news magazine calls "maize,") which has led to a similar spike in the price of the tortillas everyone in Mexico eats. The cause? Mexican corn tariffs.
Under NAFTA, tariffs are being reduced, and the Mexican corn tariff is set to be eliminated next year. However, when the American ethanol craze began, the price of American yellow corn went up 50% (in Chicago, specifically). Mexican users of yellow corn (for things like cattle feed) started buying up white corn instead, which Mexicans use to make tortillas. Prices rose fast. Without the tariff, Mexican companies would be able to import corn at subsidised American prices, increasing supply. With the tariff, it's cheaper to buy up other sources of corn, so of course that's what they did.
Mexico's trade-freindly President, Felipe Calderon, responded quickly, increasing the allowed amount of tariff-free imported corn. But Lopez Obrador, the second-place finisher in a recent presidential election (and self-declared "legitimate president of Mexico") has accused him of allowing monopolistic importers to fix prices.

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