Along the sooty gangways and rickety catwalks of the Emiliano Zapata sugar mill, sweat-soaked workers operate presses, vats and ovens in a process that has changed little since the mill's first harvest in 1938.
From a distance, the mill's chimney sprouts from the cane fields of this verdant part of central Mexico, where sugar has been cultivated since the time of the conquistadors.
Bankrupt twice since 1990 and now run by the government, the mill trucks in 7,000 tons of machete-cut cane a day from the surrounding fields. For the 5,000 growers who sell to the mill, its existence is their only hope of a livelihood.
''We go on just the same as we were 50 years ago,'' said the mill's general superintendent, Luis Armando Hernandez, bemoaning the creaky equipment and the high price of cane.
The mill, its union workers and the impoverished growers are the face of an industry at the center of a trade dispute between Mexico and the United States that has ended up in the World Trade Organization.
What is nominally at issue is a 20 percent Mexican tax on soft drinks made with high-fructose corn syrup imposed in January 2002. The tax was a response, legislators and government officials say, to the United States' unwillingness to accept imports of the Mexican sugar that were displaced in Mexico by cheaper American corn syrup.
''The purpose was to level the playing field,'' said Carlos Blackaller, a legislator from the opposition Institutional Revolutionary Party and president of the National Union of Cane Growers.
The tax has halted corn syrup imports from the United States and has helped restore the five million-ton-a-year sugar industry, which supports up to three million Mexicans.
''If the U.S. wants to send fructose to Mexico, then it needs to give access to Mexican sugar,'' said Juan Cortina Gallardo, chief executive of Grupo Azucarero Mexico, which owns and operates four mills.
Behind the dispute is the determination of both Mexico and the United States, even under the North American Free Trade Agreement, to continue protecting their industries.
Industry representatives from both countries have been looking for a compromise since October that would allow some corn syrup into Mexico and open the American market to surplus sugar.
''Thanks to the tax, they are sitting at the negotiating table,'' Jose O. Menchaca, president of the National Chamber of the Sugar and Alcohol Industries, Mexico's sugar industry association, said of American growers and refiners. ''Without the tax, they would not even answer the telephone.''
Under the deal, which would have to be approved by both governments, Mexico would scrap the tax, and the United States would withdraw the case it filed in March with the World Trade Organization.
In addition, two American producers of corn syrup -- Corn Products International and Archer Daniels Midland -- would stop any litigation against the Mexican government. The next round of talks is planned for June 22 in New York.
Both sides are looking ahead to 2008, when Nafta envisions free trade in all sweeteners, an event American sugar producers want to head off in advance.
''Chaos would stem from that,'' said Jack Roney, director of economics and policy analysis for the American Sugar Alliance, the main industry group.
In a truly free market, Mexico's soft drink bottlers would import two million tons of corn syrup, he said, displacing that amount of sugar, which Mexico could then sell to the United States. Mexico would rather sell its surplus sugar to the United States, where the guaranteed price is as much as three times the world market price.
''That would collapse the U.S. market and destroy the sugar price,'' Mr. Roney said.
The Mexicans, for their part, want to avoid being swamped with corn syrup.
''There's enough space in Mexico for U.S. high-fructose and enough space in the U.S. for Mexican sugar,'' Mr. Cortina said, ''but it needs to be managed so that there are no excesses.''
An agreement would unwind a dispute that goes back to Nafta's beginnings, when the United States and Mexico dickered over how fast to open the American market to surplus Mexican sugar before 2008. Each country's legislators wound up approving different calculations.
So when Mexico began to run surpluses in 1996, the United States, pointing to its version, blocked duty-free sugar imports.
Mexico asked for a dispute resolution panel under Nafta, but the United States never named its judges, said Hugo Perez Cano, a legal adviser to Mexico's economy ministry.
''In our view, it's a double violation of Nafta,'' he said. ''One is the lack of access to sugar, and the other is that the United States won't allow a panel to resolve it.''
Mexico tried imposing antidumping tariffs on fructose, but these were thrown out by the World Trade Organization. The soda drink tax was the next alternative.
''It has given the industry a break, but it is not an optimum solution,'' Mr. Perez Cano said. ''Nobody benefits from unilateral solutions.''
The dispute reflects a larger issue about the world trade in sugar, one of the most policy-distorted of all commodities, according to the World Bank.
Governments everywhere use subsidies, artificial prices, inventories and tariffs to support their industries. No government will be the first to end protection because cheap sugar from the open world market would swamp its industry.
Mexicans point to American subsidies that make corn syrup so cheap and import controls and inventory management practices that keep prices high for American sugar producers.
In Mexico, sugar's political power grows out of its social importance. Some 155,000 cane growers, who each farm an average of 9 or 10 acres, sell cane to about 60 mills. The farmers are organized in two associations linked to the P.R.I., the Institutional Revolutionary Party, which ruled Mexico for 71 years until 2000.
The government sets the price the mills must pay growers. By world standards, the price is high to ensure peace in the countryside, but the farmers' plots are too small to lift them out of poverty. The growers who supply the Emiliano Zapata mill earn about $1,400 to $1,600 a year, estimates Gerardo Collado Aguilar, the mill's field superintendent.
Yet Mexican farmers are so poor that cane is their best assurance of a steady income.
''Whoever grows cane knows that he will earn,'' said Quintin Silva, standing in the middle of his family's five-and-a-half-acre plot.
The harvest is almost finished, and as Mr. Silva talks, cane cutters advance across the fields, their machetes ringing against the stalks.
The cutters' faces are blackened by the cane, which must be burned before it can be cut. The pay is about $2.50 for every ton they harvest. A good cutter can gather as much as seven tons a day.
Mexico protects its own sugar -- and, by extension, jobs -- with high tariffs. The government has also stepped in to ensure that all the country's mills continue to operate.
Three years ago, President Vicente Fox's government expropriated 27 mills, about half of an industry that was buckling under multiple pressures. Prices had fallen as corn syrup imports grew and some mill owners illegally dumped sugar on the domestic market. The owners had borrowed heavily to pay growers, and by 2000, the industry owed the government $3 billion.
Under government management and protected by the soft drink tax, the sugar industry has returned to health.
''Without expropriation, many of the mills would have shut down,'' said Mr. Blackaller of the cane growers' union. ''The effect of the tax has been a stable market for sugar and better price for our cane.''New York Times:
