Aug 19, 2010National Potato Council statement on Mexican tariff situation
The National Potato Council (NPC) is disappointed by the lack of resolution in the ongoing trade dispute centering on Mexican trucks in the United States. As a result of the dispute generated by the failure of the United States to live up to its obligations under the North American Free Trade Agreement (NAFTA), U.S. potato growers remain at a disadvantage in the Mexican market. While Canadian frozen potato imports continue to enter Mexico duty free, the U.S. growers have no such access and continue to pay the price for U.S. government inaction.
“Not only does this continued retaliatory action have the chilling short-term effect of reducing immediate sales in our agriculture sector, it also has the long-term effect of ceding market share to our northern neighbor and our other trading competitors,” said John Keeling, executive vice president and CEO of the National Potato Council. “While this issue has been going on, U.S. potato growers have seen their exports of frozen potato products to Mexico almost cut in half while Canada’s has nearly doubled in the same time period. U.S. potato growers, and the rural jobs they create, have been used as a political football for long enough and the NPC asks President Obama to resolve this issue sooner rather than later.”
Mexico is the one of the largest export markets for U.S. frozen potatoes with more than $81 million worth being purchased in the 12 months directly preceding the tariff retaliation. In the 12 months following March 2009, when the tariff was imposed, that number dropped to $42 million. Under the tariff schedule released this week, frozen potatoes will be subject to a five percent tariff rather than the 20 percent tariff put in place in March 2009. While reducing the tariff improves the situation for potato products to some degree, until a credible plan is put forward by the administration to resolve the dispute, frozen potato products and other agriculture products subject to the retaliatory tariffs will lose market share and eliminate jobs in the United States.
The NAFTA trucking provision currently under dispute was originally scheduled to take effect in December 1995. Since then it has been delayed multiple times, partially implemented in 2007, and terminated by Congress in March 2009. Despite a 2001 NAFTA dispute panel finding that the United States was not living up to its obligations under the agreement, Mexico waited to implement retaliation measures valued at $2.4 billion until March 2009, when Congress voted to terminate the Cross-Border Trucking Pilot Program.
