Opinion – Mexican trucking tariffs harm U.S. pork industry’s market

By Sam Carney
U.S. pork exports to Mexico are falling, and it’s not because Mexicans have lost their taste for pork.
Since August, the price of getting U.S pork into the Mexican market has increased because of a tariff Mexico slapped on it, retribution for the United States failing to live up to a trade obligation.

That duty makes U.S. pork more expensive for Mexicans to buy compared with, say, Canadian pork, which enters Mexico at a zero tariff rate.

In fact, from August to September, U.S. pork exports going south of the border fell 20 percent while Canada’s increased 49 percent.

So, U.S. pork producers, who earlier this year emerged from more than two years of losses, and the producers of dozens of other products are suffering because of a dispute between the United States and Mexico over trucks.

THE MEXICAN government placed tariffs on 99 U.S. products, including a 5-percent duty on many pork products, such as unprocessed hams, and a 20 percent tariff on pork rinds, in retaliation for the United States’ decision to prohibit Mexican trucks from entering America.

Mexico first retaliated over the issue in March 2009, shortly after the U.S. Senate decided to remove funding for a pilot program that allowed a limited number of Mexican freight trucks into the country beyond a 25-mile U.S. commercial zone.

Pork wasn’t on that first retaliation list of goods, but 89 other U.S. products, representing an estimated $2.4 billion of exports to Mexico, were included.

Allowing Mexican trucks into the United States has been a subject of debate almost since the North American Free Trade Agreement (NAFTA) among the U.S., Mexico and Canada was signed by leaders of those countries in late 1992.

NAFTA includes a provision that opens the borders between the countries to trucks so long as the vehicles comply with all regulations applicable in the country of destination.

Unfortunately, just days before the NAFTA trucking provision with Mexico was to become effective in December 1995, the United States requested an indefinite postponement of it.

Then, after years of delay, Mexico sought to resolve the trucking issue, taking its case to a NAFTA dispute-settlement panel.

In February 2001, the panel ruled the exclusion of Mexican trucks violated U.S. obligations under NAFTA.

The ruling gave Mexico the right to retaliate against U.S. products entering Mexico.

TO APPEASE Mexico, the United States in 2007 implemented the Cross-Border Trucking Pilot Program, allowing a limited number of Mexican trucks to go beyond the commercial zone.

U.S. critics of the NAFTA trucking provision have claimed Mexican trucks are unsafe.

But, Mexico has safety protocols for its truckers comparable to ones for U.S. truckers, including drug and alcohol testing as part of the licensing process and random drug testing.

Mexican trucks that were allowed into the United States under the 2007 pilot program were held to the same safety standards as U.S. trucks and were examined and cleared by U.S. inspectors. Additionally, GPS systems would be installed in Mexican trucks that enter the United States to enforce hours-of-service standards.

CRITICISMS ALSO ring hollow given that since 1995 many Mexican trucks have traveled through the United States on their way to Canada, and several Mexican trucking companies have had U.S. permits for cross-border trucking since the 1980s.

The August 2010 updated retaliation list from Mexico gives new impetus to the United States to resolve the trucking issue and to fully implement NAFTA, which has been a boon to U.S. pork producers. Since 1993, the year before NAFTA was implemented, U.S. pork exports to Mexico have grown by 580 percent, and all U.S. agricultural exports going south of the border have increased by 257 percent. The value of pork shipments to Mexico has increased from $112 million in 1993 to more than $762 million last year, making the Mexican market the U.S. pork industry’s second largest in value terms and making the United States the No. 1 importer of pork in Mexico.

The National Pork Producers Council would like the U.S. pork industry to maintain those market positions with our neighbors to the south and is leading a coalition of agricultural, business and manufacturing organizations urging the Obama administration to resolve the trucking issue now and to ensure the United States lives up to its NAFTA obligations.

In the current global economic climate, the United States must promote trade, not turn inward and erect obstacles to it. Resolving this issue would strengthen the United States’ relationship with one of its most-important trading partners, and it would prove to the world that America stands for free and fair trade — and abides by the agreements it signs.

Sam Carney of Adair is president of the National Pork Producers Council.

SOURCE: Iowa Farmer Today