Looking at NAFTA's unfulfilled promises
WASHINGTON (DTN) -- What's the real story regarding US ag trade with Mexico? Is it the roadblocks Mexico has thrown up for imports of US high fructose corn syrup, dry beans, poultry, rice, beef, pork and apples? Or is it the increase in US ag exports to Mexico since NAFTA went into effect? According to those speaking at the Senate Finance Committee hearing Tuesday on the "unfulfilled promises" of US agricultural trade with Mexico, it's both.
Senate Finance Committee Chairman Charles Grassley, R-Iowa, who called the hearing, noted US exports to Mexico have gone up more than 90 percent since NAFTA went into effect in 1994. But Grassley also said he is so upset by Mexico's tax on soda pop containing high fructose corn syrup (HFCS), he may introduce legislation that would authorize punitive retaliatory tariffs on specific imports of Mexican agricultural products.
Mexico's HFCS tax, which is over 10 percent, has made high fructose corn syrup too expensive for Mexican soda pop makers to import it from the US. Mexican officials said they imposed the tax because the US has not allowed it to export the amount of sugar to the US that Mexico considers legal under NAFTA. US sugar growers and the US government say Mexican sugar exports to the United States are limited under a NAFTA side letter which Mexico says is not valid.
US ag trade negotiator Allen Johnson told the hearing, "The strength of the Mexican market continues to be a bright spot for U.S. agriculture. As the United States' third largest export market for agricultural goods, Mexico is a critically important trading partner for US farmers and ranchers."
But Johnson later detailed the problems with Mexico, adding that the US Trade Representative decided last week to seek a WTO panel on Mexico's antidumping duties on US milled rice because earlier consultations had not gone well.
National Corn Growers Association official Ron Litterer noted that US exports of bulk corn to Mexico have increased from 3 million tons to 5.3 million tons since NAFTA was enacted in 1994, an increase of 57 percent. But Litterer also said that Mexico's soda pop tax and Mexico's restrictions on white corn imports have made NCGA "question the long-term stability of the Mexican market."
But Michael Jorgenson, an immediate past chairman of the National Corn Refiners Association, whose members make high fructose corn syrup, took a stronger stand. "We have been completely denied access to our top export [market] for more than 21 months now," Jorgenson said. "This is an untenable situation that cannot be allowed to continue. Every effort must be made to bring an end to this industry crippling dispute."
National Cattlemen's Beef Association chief executive officer Terry Stokes said the Mexican cattle industry had filed a petition earlier this year asking for a "safeguard" -- trade talk for a protective measure -- against a "surge" in beef imports. Stokes said Mexican cattle leaders have told them they are seeking an agreement similar to one the US and Mexican governments reached on limiting poultry imports. Stokes said NCBA officials believe Mexico may take a safeguard case to the World Trade Organization, even though there is no tariff on beef between the United States and Mexico.
National Pork Producers Council President Jon Caspers testified that Mexico is the second largest destination for US pork exports after Japan, but noted that Mexico has initiated a case alleging that US producers are dumping pork in Mexico at prices below the cost of production. "The Mexican government is unilaterally withdrawing concessions that it made to the United States in NAFTA," Caspers said.
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