Your Govt. Hard At Work

OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Executive Office of the President
Washington, D.C.

USTR Press Releases are available on the USTR website at www.ustr.gov.

Embargoed until 5:15 PM:
January 17, 2006

Contact:
Christin Baker / Neena Moorjani

(202) 395-3230


United States and Mexico Reach Agreement on Tequila


WASHINGTON - Today, U.S. Trade Representative Rob Portman announced the
conclusion of an agreement with Mexico on tequila trade. Under the
agreement, exports from Mexico to the United States will continue without
interruption. Ambassador Portman and Mexican Secretary of Economy Sergio
García de Alba signed the agreement in Washington, D.C.

"We have resolved this important trade challenge in a way that ensures U.S.
bottlers will have continued access to bulk tequila," said Ambassador
Portman. "I'm very pleased we were able to negotiate a resolution."

"Mexico's initial position, which would have required that all Mexican-made
tequila be bottled in Mexico, threatened the huge investments by U.S.
companies in building bottling plants and developing brands in the United
States. USTR's prompt action and the cooperation of Mexican officials
allowed tequila bottling in the United States to continue uninterrupted for
two years during the negotiations and guarantees that these operations will
continue," Portman added. "I also want to thank the Alcohol and Tobacco Tax
and Trade Bureau of the Department of the Treasury, as well as the
Departments of State and Commerce, for their invaluable assistance in these
negotiations."

Key elements of the agreement include:

· A prohibition on restrictions of bulk tequila exports to the
United States;

· A prohibition on Mexican regulation of tequila labeling or
marketing, as well as the labeling, formulation, and marketing of distilled
spirits specialty products, outside of Mexico;

· Creation of a "tequila bottlers registry" that identifies approved
bottlers of tequila;

· Continuation of current practice with respect to addressing
Mexican concerns regarding the manufacturing of tequila in the United
States; and

· Establishment of a working group to monitor the implementation of
the agreement.


Background:

The United States is Mexico's largest export market for tequila and accounts
for 50 percent of Mexican production. In 2004, the United States imported
over $400 million of Mexican tequila. Approximately 73 percent of the total
volume was tequila in bulk form. In 2003, Mexico considered amending the
Official Mexican Standard for Tequila to require that tequila be bottled in
Mexico. Such an amendment would have created a de facto ban on exports of
bulk tequila. The United States and Mexico entered into discussions with a
view to reaching a negotiated solution, resulting in today's agreement. On
January 6, 2006, Mexico published the new Official Mexican Standard for
Tequila, which contains prohibitive requirements related to the inspection
of bottling facilities, labeling of tequila and products containing tequila,
and formulation of products that contain tequila. As a result of today's
agreement, these provisions do not apply to the United States.


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**PLEASE NOTE: The agreement has been attached in both English and Spanish.
These are the unsigned versions. The signed versions of the agreement will
be posted to the USTR website, www.ustr.gov.