Tequila from Mexico: Trouble in Magaritaville resolved

Tequila from Mexico: Trouble in Magaritaville resolved
By MARTIN CRUTSINGER
AP Economics Writer
WASHINGTON (AP) — It took two years, but the trouble in Margaritaville has
been resolved.

The United States and Mexico signed an agreement Tuesday that will allow
continued bulk shipments of tequila from Mexico into the United States.
In 2003, the Mexican government issued a proposal that would have banned
bulk shipments and required that all Mexican tequila bound for the United
States be bottled in Mexico.

U.S. liquor companies cried foul, saying the proposal was a violation of
international trade rules and ran counter to general practices in the liquor
industry worldwide. In 2004, 74 percent of the tequila imported into the
United States was shipped in bulk form.

The rule never went into effect as negotiations began to resolve the
dispute. Under the agreement signed Tuesday, the Mexican government said it
would not limit bulk shipments of tequila into the United States.
The agreement was signed in Washington by U.S. Trade Representative Rob
Portman and Mexican Economy Secretary Sergio Garcia de Alba.
‘‘We have resolved this important trade challenge in a way that ensures U.S..
bottlers will have continued access to bulk tequila,’’ Portman said in a
statement.

He said Mexico’s proposed ban would have threatened huge investments made by
American companies to build bottling plants and develop brand loyalty.
Peter Cressy, president of the Distilled Spirits Council, an American
lobbying group, said the deal would ‘‘protect the interests of Mexican agave
growers and tequila producers as well as U.S. bottlers and importers.’’
Propelled by the popularity of magaritas and tequila shots chased with lime
and salt, tequila is the fastest growing liquor in the United States. The
industry said tequila sales volume rose by 8.3 percent in 2004, with retail
sales reaching approximately $3.3 billion.

The agreement calls for establishment of a tequila bottlers registry to
identify all approved bottlers of tequila in the United States and creation
of a working group to monitor implementation of the agreement.