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Mexico to expand retaliatory tariff list

by Joan Murphy | August 18, 2010
WASHINGTON -- The Mexican government has announced that more U.S. products will be added to its retaliatory tariff list, signaling negotiations in the 17-month trucking dispute between the two trading partners are no closer to being resolved.

After Congress killed a two-year-old pilot program that was allowing some Mexican truckers to haul cargo in the United States, Mexico retaliated in March 2009 by imposing tariffs on 89 U.S. products, including cherries, grapes, lettuce, almonds, apricots and pears.

Mexican officials argued that killing the trucking program violated bilateral trade agreements and was unnecessary because studies showed that the trucks were safe on U.S. roads.

Although Congress removed the funding restriction in December, "Mexico has yet to receive a formal proposal for the resolution of this dispute and an unequivocal signal that the U.S. government is working to eliminate the barriers that Mexican long-haul carriers face to access the U.S. market," the Mexican embassy said in an Aug. 16 statement.

The Mexican government is expected in the coming days to post a new list of 99 U.S. products worth about $2.5 billion that will be subject to new tariffs, and according to early press reports, the new list may include apples, pears, onions, oranges and grapefruits.

"American apple growers are disappointed and frustrated by the Mexican government's decision to assess this unwarranted, unfair duty on apples," USApple President and CEO Nancy Foster said in an Aug. 18 statement. "We urge the Obama administration to act swiftly to resolve the cross-border trucking dispute. Failure to act on this issue is hurting U.S. farmers and opportunities to grow U.S. apple exports."

Mexico is the largest export market for U.S. apples. Last year, the country imported 11.5 million boxes of fresh U.S. apples worth $207 million and dried apples valued at $23 million. This represents 27.5 percent of the total U.S. apple export value.

"We are disappointed that the Mexican government has announced its intention to impose duties on additional U.S. products related to the cross- border trucking dispute between our countries," U.S. Trade Representative Ron Kirk said in an Aug. 16 statement.

"Following President Obama's direction, Department of Transportation Secretary Ray LaHood and I have worked with other agencies and stakeholders in Congress seeking to resolve this issue in a way that addresses safety concerns and upholds our trade obligations," Mr. Kirk said in the statement. "We are committed to continuing to work with members of congress and our counterparts in Mexico to resolve the dispute and end these duties."

But Barry Bedwell, president of the California Grape & Tree Fruit League, said that no one should be surprised that the government of Mexico escalated tensions, and he faults the Obama administration for not resolving the issue.

"I'm very frustrated with this administration. Here we are going on the second year," he said.

Businesses handling table grapes - hard hit by Mexico's 45 percent tariff - shipped 1.6 million boxes to Mexico in 2009, a 70 percent reduction from the 5.5 million boxes shipped in 2008, Mr. Bedwell said.

He added that he hopes the latest round of retaliatory tariffs places more pressure on the U.S. government to develop a proposal that is acceptable to the Mexican government.