Oct 4, 2010

Mexico puts tariff on apples, other goods

The Mexican government has imposed tariffs on more imported U.S. goods, including fresh and dried apples and other produce items.

The 20-percent tariffs are part of Mexico’s retaliation for the United States’ refusal to open its borders to Mexican trucks – even though such an action is required under the North American Free Trade Agreement (NAFTA). The tariffs went into effect Aug. 19.

The day after the tariffs went into effect, Leighton Romney, chief executive officer of Paquime Group – a fruit producer, importer and distributor in Mexico – laid out the history of the trucking dispute during the U.S. Apple Association’s (USApple) Apple Crop Outlook & Marketing Conference in Chicago.

Under NAFTA, both the United States and Mexico were to open their borders to each other’s trucks starting Jan. 1, 2000. Due to pressure from domestic truck drivers, however, the U.S. government did not open its borders to Mexican trucks, citing “safety concerns.”

A NAFTA arbitration panel ruled against the United States about a year later. After that, a bi-national committee was put together to try to fix the problem. In 2007, both governments agreed to create a pilot program that would allow Mexican trucks into the United States on a limited basis. In March 2009, however, the U.S. Congress cut funding for the program and it was canceled, according to Romney.

Mexico retaliated in August 2009, putting tariffs on 89 U.S. products, including 10-percent tariffs on onions, cabbage and lettuce; 20-percent tariffs on strawberries, frozen potatoes, peas, pears and cherries; and a whopping 45-percent tariff on fresh grapes.

By August of this year, the United States still wasn’t allowing Mexican trucks into its territory, so the Mexican government expanded the tariff list. Romney listed some of the items now burdened with 20-percent tariffs: apples, onions, lettuce, grapes, potatoes, strawberries, cherries, apricots, peas, dates, sweet corn, pears, dried fruit, fruit nectar, fruit juices, wine and Christmas trees.

The Mexican government put the new list together carefully, selecting products that would exert pressure on the U.S. government to act, without threatening Mexico’s breadbasket. As a result, Mexico’s massive grain imports were pretty much left alone, according to Romney.

USApple condemned the Mexican decision.

“American apple growers are disappointed and frustrated by the Mexican government’s decision to assess this unwarranted, unfair duty on apples,” said Nancy Foster, USApple’s president. “We urge the Obama administration to act swiftly to resolve the cross-border trucking dispute. Failure to act on this issue is hurting U.S. farmers and opportunities to grow U.S. apple exports.”

Mexico is the largest export market for U.S. apples. The country imported 11.5 million bushels of fresh U.S. apples last year, worth $207 million. It also imported $23 million worth of dried apples. Those numbers represent 27.5 percent of the total value of U.S. apple exports, according to USApple.

And U.S. growers supply the vast majority of Mexico’s fresh apple imports. In 2008, Mexico imported 212,220 metric tons of fresh apples – 196,698 of them from the United States, according to the 2010 World Apple Review, a publication of Belrose Inc.

Most of those imports come from Washington state. Between 2006 and 2008, nearly a third of that state’s apple exports went to Mexico. In the 2008-09 crop year, Washington sent 10.8 million boxes to the southern country, according to the Yakima Valley Growers-Shippers Association.

The new tariffs came just months after the United States and Mexico had appeared to settle a previous dispute involving apples. On March 3, Mexico had finally eliminated its long-running tariffs on some U.S. Red and Golden Delicious apples, ending a trade dispute that went back 14 years. At that time, 1996, Mexico claimed Washington state growers had dumped an excess amount of apples into the country, and the tariffs were a retaliatory measure.

By Matt Milkovich, Managing Editor