|
Texas Agriculture News |
Mexico imposes new tariffs on U.S. after NAFTA violation
Friday, September 3, 2010
|
 
|
|
By Amanda Hill
Staff Writer
A trucking dispute between Mexico and the U.S. has led Mexico to expand a list of tariffs to 54 American agriculture products worth an estimated $1.7 billion.
The tariffs on American exports come after Congress discontinued the U.S.-Mexico Cross-Border Trucking Demonstration Project, a pilot program which allowed up to 100 firms from both countries to transport international cargo across the border without restriction.
In evaluations of the fiscal year 2009 budget, Congress determined there was not adequate funding for the Department of Transportation (DOT) to continue the Demonstration Project. Under current U.S. law, Mexican transportation vehicles only may enter the country up to 25 miles from the border.
Under NAFTA, participating countries must allow free transportation and circulation of goods across North American borders. When a country does not comply with NAFTA requirements, the reciprocating country may file a case to correct the infraction.
"Mexico filed a NAFTA petition, which was granted in their favor, because the U.S. is not fulfilling their obligations," said Dr. Parr Rosson, professor and extension economist with the Texas AgriLife Extension Service at Texas A&M University. "Mexico agreed to withhold tariffs as long as we had a pilot program, and they held off for several months."
Mexico’s latest action is in addition to an original list of tariffs on 36 American agricultural products at $864 million in trade value, released immediately after Congress discontinued the free transportation pilot program.
Impact on the Texas market
While a few Texas crops are included in the list of tariffs, many key commodities, such as beef, wheat and cotton, will not be affected at this time. Texas farmers and ranchers likely will feel an impact from tariffs on onions (10 percent), shelled nuts (20 percent), juices (15-20 percent) and cheeses (20-25 percent).
Ned Meister, Commodity and Regulatory Activities director at Texas Farm Bureau, cautions Texas farmers and ranchers to remain alert to the issue, even if their crops are not affected. Continued disputes between Mexico and the U.S. could lead to further sanctions.
"The tariffs may not impact Texas agriculture significantly now, but they may in the near future. Mexico could continue to expand the list and add critical Texas crops, such as beef, corn or grain sorghum," he said.
The most significant additions to the list are tariffs on pork (5 percent) and sweet corn (15 percent). Meister noted that states in the Midwest will be hit by these tariffs, in particular. According to the United States Department of Agriculture (USDA), Mexico ranked second (22 percent) in total exports of pork from the U.S. in 2009.
U.S./Mexico relations
Retaliation approved by the NAFTA ruling will put a strain on commerce between Mexico and the U.S. The two countries have worked since NAFTA’s inception on Jan. 1, 1994, to strengthen their relationship, particularly through free trade.
"If we’re going to have a trade agreement, we need to play by the rules," Dr. Rosson said. "Otherwise, the agreement is undermined, and you start having these kinds of problems. Disagreement like this may lead to other issues."
As the second largest export market for U.S. agricultural products, Mexico imposed the tariffs to express urgency in resolving the transportation issue. Congress will need to work with the USDA to determine how the U.S. will respond.
|
|
|
|
|
|
|