WASHINGTON, D.C. – After nearly two years of negotiations between the U.S. and Mexican governments, a proposed Mexican regulation banning bulk exports of tequila and requiring all bottling to occur south of the border has been dropped, according to the Distilled Spirits Council of the United States. The agreement was signed today in Washington by United States Trade Representative Rob Portman and Mexico’s Secretary of Economy Sergio Garcßa de Alba. “We are extremely pleased that the United States and Mexican governments have reached an agreement on tequila that will protect the interests of Mexican agave growers and tequila producers as well as U.S. bottlers and importers” said Peter Cressy, President of the Distilled Spirits Council. “The agreement will ensure that the tequila sold in the United States market continues to meet rigorous Mexican standards — a goal shared by the Distilled Spirits Council and its member companies.” The agreement was negotiated in response to a Mexican government proposal made in August 2003 that would have banned shipments of tequila in bulk, in violation of Mexico’s NAFTA and WTO obligations. The proposal would have required that all tequila be bottled in one of the five Mexican states comprising the tequila region. The Council expressed significant concerns at the time that a ban on bulk shipments would have a serious effect on U.S. consumers and on the tequila market in the United States in general. In 2004, 74 percent of the tequila imported into the U.S. was shipped in bulk form. Under the agreement, U.S. importers will have the flexibility to import bottled tequila from Mexico or to bottle it themselves in the United States. “The agreement will allow U.S. and Mexican companies to continue to build on the success that tequila has achieved in the U.S. market over the past decade,” said Cressy, pointing out that tequila remains one of America’s fastest growing spirits categories. “Our member companies will be able to continue to develop and market products that cater to those adults who favor the ever-popular ‘Margarita’ as well as to aficionados of premium ‘sipping’ tequilas.” In 2004, tequila sales volume rose 8.3 percent to 8.7 million nine-liter cases, totaling approximately $3.3 billion in retail sales. “The Distilled Spirits Council and its member companies are grateful to the U.S. and Mexican negotiators who have worked tirelessly over many months to reach this agreement,“ said Cressy. “It is a good agreement, and one that reflects commercial realities. We pledge that we will do our part to ensure that it accomplishes its goals.”