Tariffs on U.S. agricultural exports to Mexico over the past 11 months are weighing on sales, and a coalition of industry advocates and sympathetic Democratic lawmakers are pushing the Obama administration to solve the Mexican truck dispute that caused the trade friction.
In a Jan. 29 letter to members of Congress, Rep. Dennis Cardoza, D-Calif., and Rep. Rick Larsen, D-Wash., asked colleagues to sign a letter encouraging Department of Transportation Secretary Ray LaHood and U.S. Trade Representative Ron Kirk to find a solution to Mexican agricultural tariffs.
Congress terminated funding in the fiscal year 2009 omnibus appropriations bill for a pilot program that would allow trucks from Mexico into the U.S. to deliver loads directly to buyers.
A Mexican truck unloads produce in Houston in 2006.
Cardoza and Larsen said the truck ban directly led to Mexico imposing retaliatory tariffs last March, resulting in economic setbacks for hundreds of growers and businesses.
The lawmakers wrote that Congress removed the prohibition in the fiscal year 2010 consolidated appropriations bill.
“Despite repeated letters and communication with the administration, the department of transportation has not moved forward to develop a plan that would remove these burdensome tariffs from the backs of our domestic businesses and farmers,” the letter said to their colleagues said.
In the letter to LaHood and Kirk, the lawmakers expressed concern about the lack of action and transparency by the Department of Transportation to address the tariffs imposed by Mexico.
“These tariffs have had a devastating impact on our local industries and area economies and we urge you to take immediate action to implement a plan of action to rectify this situation,” the letter said.
Calls to the public affairs office of the Department of Transportation were not returned.
Mexico has imposed retaliatory duties on more than 90 products, with ranging between 10% and 45%. Fresh produce items hit by the retaliatory tariff include lettuce, strawberries, pears, apricots, dates and onions. Frozen potatoes were also hit by a 20% tariff.
Without 20% retaliatory tariffs on cherries last season, Mark Powers, vice president of the Northwest Horticultural Council, Yakima, Wash., said industry experts believe that Northwest cherry exporters could have exported 50% more volume to Mexico.
Likewise, the cumulative negative effect on fresh pear growers is close to $11 million, Power said.
“That’s coming straight out of the growers’ pockets,” he said.
The letter to the administration officials said that despite expressions of confidence from the Obama administration for 11 months, a solution would be found that would fulfill U.S. obligations to Mexico under the North American Free Trade Agreement the letter said there is still vision for what the proposed plan will be.
“Our constituents need help immediately and we implore you to work quickly to implement a program that ensures safety and normalizes trade between the U.S. and Mexico,” the letter said.
Powers said a recent USDA listening session about rural economic development in Washington State had growers point out to Administration officials that solving the tariff problem would create instant opportunity and sales for growers.
Meanwhile, he said that U.S. also must show it adheres to its trade obligations to have credibility with other trading partners.
Ag industry decries tariffs
The Alliance to Keep U.S. Jobs, a coalition of agriculture and industry leaders seeking an end to the retaliatory tariffs, said more than $1.5 billion in U.S. manufactured products and $900 million in U.S. agriculture are hurt by the added costs of exporting to Mexico.
“It’s crazy when you have the administration saying on one hand it is all about jobs, jobs, jobs and you don’t fix this problem,” said John Keeling, executive vice president and chief executive officer of the Washington, D.C.-based National Potato Council. Keeling said U.S. frozen potato exports to Mexico are off 50% in value and 60% in volume over the past year, while Canadian exports to Mexico are up 70%.
“The ball has been in the administration’s court to move this forward,” said Kam Quarles, vice president of government relations and legislative affairs for the United Fresh Produce Association, Washington, D.C. Union support for elimination of the pilot program appears to be contributing to the delay in solving the problem, he said. Quarles said simply restoring the program that had been in place could likely solve the problem in short order.
That pilot program allowed limited access for Mexican trucks on U.S. highways. It began in 2007, six years after a North American Free Trade Agreement dispute settlement panel ruled that the U.S. was in violation of the NAFTA by prohibiting Mexican trucks in the U.S.
“It wasn’t everything the Mexicans wanted under NAFTA, but it was accepted,” Quarles said.
Given the letter from Cardoza and Larsen, Quarles said there is frustration on Capitol Hill about the how much time it is taking to restore the pilot program and remove the retaliatory tariffs.