The Obama administration says it wants to pursue new trade agreements as a way to increase exports of U.S. goods, but some industry officials would like to see the administration also settle ongoing trade disagreements that are costing exporters hundreds of millions of dollars.
“As an exporter, I don’t like to see the United States lose (trade dispute) cases, period,” said Nick Giordano, vice president and counsel for international affairs at the National Pork Producers Council. “But as an exporter, when the U.S. loses a case, I want to see us get in compliance.”
The pork producers and other agricultural lobbyists aren’t shy about pushing the government to force other nations to open borders that have been closed to U.S. products using methods that violate existing trade agreements. Giordano says turnabout is fair play in free trade. “Sometimes the U.S. is in the wrong,” he said. “It isn’t surprising that other countries want us to live up to our commitments.”
One of the biggest ongoing bilateral disputes is with Mexico, the second-largest export market for U.S. pork by value.
Sixteen years after the passage of the North American Free Trade Agreement, the U.S. still does not allow Mexican trucking companies to operate north of the border. Cross-border trucking between the U.S. and Mexico was part of NAFTA, but it has never been implemented, except for a limited test by the Bush administration.
After Congress pulled the plug on a Bush administration pilot program that had permitted 97 Mexican trucks to operate in the U.S., Mexico retaliated with $2.4 billion in tariffs on U.S. manufactured and agricultural products. Those tariffs already have been approved by the World Trade Organization but were put on hold by Mexico while the pilot program was in place.
Among the commodities affected are Christmas trees, pears, potatoes and onions from Oregon, and grapes, strawberries and other produce from California.
Giordano said the pork industry, along with others in the agricultural sector, is concerned Mexico might expand or amend the list. “We don’t want to end up on the retaliation list, but we could,” he said.
Sectors placed on the retaliation list last year have been hit hard. “Grapes have a 45 percent tariff. It’s had an impact,” said Ken Gilliland, director of transportation and international trade for the Western Growers Association. “When you get to the grocery store and add 45 percent on top of the price, it’s easy to figure out that we’re not competitive.”
According to the California Farm Bureau Federation, the state’s entire table grape sector shipped about 1.7 million 19-pound boxes of grapes to Mexico last year, down almost 70 percent from the 5.5 million boxes shipped in 2008.
“Strawberries, onions, almonds, lettuce — they’ve all been impacted,” said Gilliland, whose group represents agricultural interests in Arizona and California that grow, pack and ship about half the nation’s produce. “The tariffs range from 10 percent to 45 percent, and our market is getting smaller.”
Mexico also targeted potatoes grown in the Pacific Northwest. Exports of frozen potatoes to Mexico have fallen by more than half, from $64 million to $30 million. Because of the lowered demand, ConAgra Foods’ Lamb Weston subsidiary has closed its potato-processing plant in Prosser, Wash.
|President Obama is under increasing pressure from members of Congress, manufacturing groups and the agricultural sector to resolve the dispute. He’s also under increasing pressure from the Teamsters union and its congressional supporters who don’t want to see Mexican trucks operating north of the border.
The political wrangling worries Giordano. “Mexico was very patient and waited years to retaliate. The longer it goes on, the more concerns you have,” he said.
The U.S. pork industry has a lot to lose if it were hit with tariffs by Mexico. The country was the largest customer of U.S. pork by volume, buying 503,503 metric tons in 2009 — 27 percent of all pork exports. Based on value, Mexico is the No. 2 market behind Japan. The $762 million of pork sold to Mexico last year represented 17.6 percent of all export sales.
“We’ve had to work hard for many years to get our product into Mexico,” Giordano said. “We’ve built a good market. These sorts of trade issues necessarily involve lots of innocent bystanders.”
He said U.S. pork producers have lost $6 billion in the last several years and just started to climb into profitability last month. “To have restrictions imposed now,” Giordano said, “would be economically lethal.”
Contact Stephanie Nall at email@example.com.