Apr 7, 2007

Mexican Court Nixes U.S. Apple Exporting Deal

After years of work and thousands of dollars spent, U.S. apple growers are back to square one in their efforts to export Delicious apples to Mexico.

What was a “done deal” evaporated Feb. 24, just days before Red and Golden Delicious apples from the Pacific Northwest were to be allowed into Mexico under a pricing agreement that would have eliminated a 46.58 percent tariff.

The deal was struck down by Mexico’s 16th District Court, which issued a permanent injunction on behalf of Mexican apple growers. The deal had been negotiated between Mexico’s Ministry of Economics and Northwest Fruit Exporters (NFE), which represents 83 fruit growers.

Jim Archer, NFE’s manager, said the ruling left little room for optimism. The Northwest growers had been working to re-establish the market since 1997, when a group of Mexican growers charged Americans with dumping apples into Mexico at below-cost prices.

The ruling upsets the apple cart for American apple growers elsewhere as well.

“We in the U.S. Apple Export Council are working together to figure out our next step,” said Denise Yockey, executive director of the Michigan Apple Committee. “We were modeling our efforts on what the Northwest growers had done, but that’s struck down and we’re back to square one.”

The U.S. Apple Export Council represents growers in Michigan, New York,
Virginia and California, who also want into the Mexican market with Golden and Red Delicious.

For now, she said, marketers in those states are looking at “different market niches” offered by other varieties.

“Our growers did pretty well with Romes this year,” she said. “We sold all we had and could have sold more.”

Varieties other than the Delicious can be exported duty-free into Mexico if growers follow protocols that have been developed to meet Mexican standards.

The Mexican situation is frustrating for American apple growers, Yockey said, because Mexico is such a good apple market and because other countries ¬– Chile and Canada – have agreements offering duty-free access. Under the North American Free Trade Agreement, the United States should have the same access.

Why is all this legal under NAFTA? It stems from the 1997 dumping charges Mexican growers leveled at Northwest U.S. growers. In a dumping case, the Mexican government investigates the charges and has the right, under the trade rules, to negotiate directly with the offending group, in this case the Northwest growers.

This has taken years. The Mexican Department of Economics investigation took five years, during which time a 101 percent tariff was in effect, and then ended with the 46.85 percent tariff in 2002. Three more years went by as Northwest growers negotiated a new deal, and that was struck down in the Mexican court.

Meanwhile, Mexican consumers are eating apples, importing nearly 9 million boxes in addition to the 20 million Mexican growers produce.

“It may be time for the U.S. government to take over on behalf of all of us in the American apple industry,” Yockey said.