The Latest Salvo

09/01/2010 02:00:00 AM
Vicky Boyd, Editor

In light of a continuing cross-border trucking dispute, the Mexican government has added several agricultural commodities to a list of nearly 100 U.S. products that are subject to higher import tariffs.

The tariffs, which range from 5 percent to 45 percent, essentially price many of the commodities out of the market and allow lower-priced imports from other countries to fill the market void.

“We value Mexico so much, and we have a great crop,” says Nancy Foster, president and chief executive officer of the Vienna, Va.-based U.S. Apple Association. “It’s just wrong that suddenly, our apples are 20 percent more expensive. We know they have taste palates that like the taste profile of our apples, and they like our varieties.”

Nevertheless, she says Mexico is within its rights under the North American Free Trade Agreement.

“Frankly, it’s not a total surprise,” Foster says. The U.S. apple industry dodged the bullet the first time and was not on the initial list.

But the longer the dispute continued, she says, the greater the chances were that apples would be included on a tariff list.

Long-simmering dispute

Problems began in 2001 when the NAFTA dispute panel ruled that the United States failed to live up to its obligations under the trade agreement and Mexico was within its right to institute penalties.

In March 2009, Congress voted to eliminate funding of the Mexico Cross-Border Trucking Demonstration Project that allowed 100 Mexican trucking firms to operate outside of a trade zone near the U.S.-Mexican border.

In retaliation, Mexico imposed tariffs on several U.S. products, including 20 percent on frozen potatoes and 20 percent on roasted pistachios.

The initial list contained about 99 agricultural and non-agricultural export items, valued at about $2.4 billion.

Despite pressure from several commodity groups, including the National Potato Council, the Obama administration and many Congressional Democrats have failed to restore the funding for the trucking program.

Mexico released a second list, including 54 agricultural commodities, on which higher tariffs would be levied in mid-August. Some commodities rotated off, while others—such as apples—were added.

Bad timing

Adding apples to the tariff list couldn’t happen at a worse time, Foster says.

“We have great yields, and Mexico is price sensitive,” she says.

In 2009, Mexico was the second-largest export market for U.S. apples, accounting for about 27 percent of all exported apples for a value of $206 million.

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