Mar 12, 2010

Mexico Drops Tariffs on Red and Golden Delicious Apples

Mexico has finally eliminated its tariffs on Red and Golden Delicious apples from the United States, ending a trade dispute that goes back 14 years.

Starting March 3, the tariffs were brought down to zero. The decision was made in response to a North American Free Trade Agreement (NAFTA) panel order, and though the Mexican government had an opportunity to challenge the decision, Jim Archer, manager of Northwest Fruit Exporters, said that was unlikely.

“We think it’s over,” he said. “We believe the panel order has been satisfied.”

The elimination of the import duty, which was almost 47 percent in some cases, probably won’t lead to a huge surge in overall sales, but probably will lead to a more even distribution among exporters. For the last several years, a few companies with low or no duty rates have been responsible for the majority of Red and Golden Delicious sales to Mexico. Now, the companies that faced high rates will be able to compete on an even playing field, Archer said.

The decision will have the biggest effect on Washington state apple growers. Mexico is that state’s largest apple export market, and Delicious varieties make up a substantial percentage of those exports. For example, between 2006 and 2008 almost a third of Washington’s apple exports went to Mexico. Of that third, nearly 43 percent was Red Delicious and nearly 29 percent was Golden Delicious, according to the Yakima Valley Growers-Shippers Association.

“We’re glad to see (the import duty) come to a close,” said Archer, whose Northwest Fruit Exporters is based in Yakima, Wash. “It’s been a long, tedious process.”

The dispute goes back to 1996, when Mexico claimed that Washington state growers dumped an excess amount of apples into that country.

Subsequently, a tariff of 101 percent was put in place while the matter was being investigated. In 2002, Mexico lowered the tariff to 46.58 percent on Red and Golden Delicious apples from the United States. That duty was in place until May 2005, when Mexico amended the tariff based on sales data supplied by Pacific Northwest growers. Some were exempted from the tariff because they could prove they didn’t dump apples, others had lower tariffs of 2 percent to 11 percent and the remaining exporters from the Pacific Northwest faced a duty of 44.77 percent. At that time, other states shipping Delicious apples to Mexico – California, Michigan and Virginia – were still at the 46.58 percent tariff rate.

Michigan and Virginia were unexpectedly exempted from the trade dispute about a year ago, said Denise Donohue, executive director of the Michigan Apple Committee. The tariff didn’t have a large effect on Michigan growers, Donohue said, because the state wasn’t shipping many Red or Golden Delicious apples to Mexico.

Last November, a NAFTA panel that mediates trade disputes between member countries asked the Mexican government for a new determination on the apple tariffs by Dec. 15, according to USDA’s Foreign Agricultural Service. The Mexican Secretariat of the Economy responded that the deadline didn’t provide enough time, so the NAFTA panel gave the ministry until Jan. 15.

The Mexican ministry’s filing on Jan. 13 did not include a final decision, but a final decision finally was published March 2.

— Matt Milkovich