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Grape industry looking to resolve dispute with Mexico

by Rand Green | March 11, 2010
A retaliatory tariff on California grapes imposed last year by Mexico in response to a U.S. ban on cross-border trucking cost the industry $43 million in 2009, and industry leaders as well as a congressional coalition are pushing hard to get the situation resolved before the start of the 2010 grape season, according to Barry Bedwell, president of the California Grape & Tree Fruit League in Fresno, CA.

"We now have the numbers from 2009 on fresh grapes that really show the impact of that 45 percent tariff," said Mr. Bedwell. "We had estimated that we could lose 75 percent of our market, and in fact, we lost right at 70 percent [in volume]. In value, we lost a little over 72 percent."

Mexico is the California table grape industry's second-largest export trading partner. The volume of grapes exported to Mexico dropped from "about 5.5 million boxes in 2008 down to 1.6 million in 2009, and the value went from almost $60 million to just over $16 million. So we got hammered," Mr. Bedwell said. "We know it is more important than ever as we go into another crop year to get that tariff lifted. Our goal is to get something done here in advance of the [2010] fresh grape season, but we also tell other people in other commodities that even though they may not be affected right now, the Mexicans are considering this concept called carrouselling," which means the tariff might be dropped on some commodities but others may be added to the list. "We should all be working for a resolution to this as soon as possible," he said.

"The Teamsters have been spearheading the effort to stop Mexican trucks [from entering] the United States," Mr. Bedwell said. The Teamsters claim it is a truck safety issue, but "the U.S. Department of Transportation did a study [showing] that Mexican trucks were as safe as or safer than their U.S. counterparts, so that argument doesn't hold water. It really is because the labor unions don't like free trade agreements."

On Feb. 2, American Trucker published an article quoting James Hoffa, general president of the International Brotherhood of Teamsters, as saying, "We got the border closed to unsafe Mexican trucks and we're keeping it closed. The Teamsters did that, nobody else did that -- the Teamsters did that."

"But we've got our work cut out for us," Mr. Hoffa continued, blaming what he called "the tea-baggers" and "the far, far right" for their opposition to the union agenda.

Contrary to the Teamsters' claims, "it has never been a safety issue," said Allison Moore, communications director for the Fresh Produce Association of the Americas in Nogales, AZ.

That is a "false fear" put out by the unions "just to save their own position instead of learning how to be competitive," Ms. Moore said. "Shame on the people that actually buy into it."

The FPAA's position "has always been that we see completely the position Mexico is taking," Ms. Moore said. "It is important to have the United States live up to its trade agreement obligations." The United States "isn't bashful about forcing other countries to live up to their obligations in the trade agreement," she added.

On March 1, a group of 56 congressional representatives, led by California's Dennis Cardoza and including "all eight that represent our membership in the Grape & Tree Fruit League, both Republicans and Democrats," sent a letter to the secretary of transportation and the U.S. trade representative "to try to get this issue resolved as soon as possible," said Mr. Bedwell.

That letter states, in part, that "administration officials have repeatedly expressed confidence that a resolution to the current dispute could be found that would fulfill our obligations to Mexico" under NAFTA, but "to date, the administration has not shared any of the principles or the parameters of a proposed plan. The current situation is unsustainable and untenable."

Kathleen Nave, president of the California Table Grape Commission, told The Produce News March 10 that there now seems to be some progress.

The 45 percent tariff on table grapes "has had a devastating effect on the California table grape industry's ability to ship fruit into that market," Ms. Nave said. But the Mexican government "has made it very clear that the United States is obligated under NAFTA to put a cross-border trucking program back in place and that "the U.S. has been remiss" in not doing so. But they have made it "very clear that is what it would take to remove the tariff," she said.

"The lack of adherence to our obligations under NAFTA is a problem and has been for a very long time." Ms. Nave continued. "We have been working on this in Washington, DC, since last June." Fortunately, "there has been some progress made," and "we are happy to see that the issue has moved to the top of the Obama administration's trade agenda. The administration is clearly moving forward to address the issue."