US should resolve Mexico tariff issue

Opinion: November 2, 2010 at 12:00a.m.

By Kate Riley

McClatchy-Tribune

The good news for Washington apple growers is they are harvesting a bumper crop. The bad news is they will be selling a lot fewer Galas and Red Delicious to their No. 1 export customer, Mexico.

U.S. apples suddenly are 20 percent more expensive to Mexican buyers, which could translate to about $44 million in lost sales this year. Just in time for harvest, Mexico added apples to its tariff list of now 99 U.S. commodities and products worth about $2.04 billion.

Unfair? Absolutely. Unwarranted? Not so much.

It’s been almost 10 years since a North American Free Trade Agreement dispute-settlement panel ruled Mexico could retaliate against the U.S. for years of brazenly flouting the trade pact. Under NAFTA, the U.S. was to move toward allowing Mexican trucks to drive products into the U.S., as happens with trucks from its other NAFTA partner, Canada.

Last straw

Mexico was patient, but the last straw was the 2008 cancellation of a pilot project testing the safety of Mexican trucks. The Teamsters opposed the project because it could lead to eliminating the jobs of workers who unload U.S. trucks at the border, drive cargo across the border where it is loaded onto Mexican trucks . . . and vice versa. The U.S. Chamber of Commerce estimated this process adds about $400 million to U.S. consumer costs of Mexican imports.

A tragic truck accident fueled North Dakota Sen. Byron Dorgan’s effort to kill the trucking project prematurely even though results were promising. In 2008, Congress prohibited the transportation secretary from continuing the project.

It was political and emotional — and premature. Last month in Dallas, U.S. Trade Representative Ron Kirk admitted as much.

“The honest reality is the Mexican trucks performed as well as, if not better than, the U.S. trucks,” Kirk told the National Conference of Editorials Writers. Now the second harvest season with tariffs in place is winding down in the middle of a struggling economy with still no sign of a viable plan.

Among those impacted by the tariffs is Washington state’s own Agriculture Director Dan Newhouse, whose Yakima Valley farming operation grows Granny Smith apples. He says it’s hard on producers across the state.

“Mexico is a very important trading partner,” he said. “They are still buying these products but maybe not from us.”

Frozen potatoes

Almost all of the $20 million in lost Washington sales of processed frozen potatoes was shifted to growers near Taber, Alberta, said Matt Harris, trade director for the Washington State Potato Commission. Though the tariff was reduced this year from 20 percent to 5 percent, he’s still worried about regaining market share.

Frustration out in rural Washington is growing. When farmers cut production, less money gets spent for seed, fertilizer, equipment and other inputs.

“We’ve been trying to stay on top of these Cabinet departments,” Harris said, “But when you get into a meeting, the finger gets pointed in the other direction or it gets pointed to Congress.”

Especially in this difficult economy, it is time for the Obama administration to find a way for the U.S. government to meet its NAFTA obligations so American producers and manufacturers don’t bear the burden.

Kate Riley is an editorial writer for the Seattle Times.