The U.S. poultry industry got a mixed decision from Mexico after one government agency formally decided U.S. producers were dumping chicken leg quarters, but another refused to allow retaliatory tariffs to be put in place. “Official decisions don’t say that much and sometimes we try real hard to read between the lines,” said Jim Sumner, executive director of the U.S.A. Poultry and Egg Export Council.
It’s unclear when, or if, the tariffs would be imposed, but Sumner said the industry is looking at various legal options and “strongly considering” a challenge of the dumping decision. “The Mexican government decided that all parts of a chicken are worth the same amount,” he said. “We don’t think the decision makes sense, and we think it is a bad precedent to have on the books.”
Two legal avenues are available for a challenge: The U.S. government could file a case at the World Trade Organization, as it has done with a similar case involving China, or the dispute could be sent to a North American Free Trade Agreement panel. “The industry can ask for the NAFTA panel on its own, and doesn’t need to wait for the government to act. Those cases usually also move more quickly than WTO challenges,” Sumner said.
After the complaint was filed last year, U.S. poultry industry representatives spent months trying to negotiate an import quota level with its biggest customer. Those talks ended abruptly last spring when executives at some of the largest U.S. poultry companies pulled out of the negotiations, concerned that the voluntary action might spur similar moves by other countries.
After actions in Russia and China to limit U.S. imports, those former top customers have become minor players in the poultry market. That made Mexico a more important customer: U.S. exports soared from $489.3 million in 2007 to $845.8 million in 2011.
The Mexican agency that prevented the tariffs from taking effect cited economic grounds, saying Mexican consumers already had been hit by rising prices for corn tortillas and eggs, and raising the cost of chicken would be too severe.
Mexico’s egg consumption is the highest in the world at 350 eggs per person each year, and prices on the staple more than doubled after the avian flu hit its poultry industry in June.
Mexican officials eased import regulations on eggs in August, making it easier to bring in eggs from the United States. President Felipe Calderon announced in late August that about 650 tons of U.S. eggs were imported to help alleviate the shortage and high prices.
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