Some say tariffs target districts of certain lawmakers

By MATEUSZ PERKOWSKI

Capital Press

The Mexican government has imposed new tariffs on several valuable Western crops that are expected to cause millions of dollars in losses to U.S. farmers.

The tariffs are in retaliation for a continued prohibition on Mexican trucks traveling beyond a narrow area along the U.S. border.

Mexico initially imposed tariffs on 89 products last year, after the U.S. suspended a pilot program that allowed Mexican trucks to travel U.S. highways.

That list has now been expanded to include additional agricultural goods like apples, oranges, pistachios, cheese and pork. Of the 99 items now on the list, 54 are farm-related.

Most of the tariffs previously imposed on crops -- such as Christmas trees, onions, pears, cherries, strawberries, almonds, grapes and others -- remain in place, although the duty on potatoes was reduced from 20 percent to 5 percent.

Ricardo Alday, spokesman for the Mexican Embassy in Washington, D.C., said the measures are necessary because the U.S. hasn't lived up to its obligations under the North American Free Trade Agreement.

As part of that trade deal, the U.S. was supposed to begin allowing Mexican trucks into the country in 1995. Aside from the 18-month pilot program that ended in March 2009, that provision hasn't been implemented.

At the urging of U.S. trucking and union interests, Congress passed legislation that ended the pilot program.

"We have worked constructively and patiently with successive U.S. administrations on this issue with more or less the same results," Alday said. "We don't want to hurt U.S. businesses and jobs, but U.S. inaction has left us with no choice."

President Obama has directed the Office of the United States Trade Representative to work with members of Congress to find a way to resolve safety concerns over Mexican trucks while upholding U.S. trade obligations, said USTR spokesperson Nkenge Harmon.

"Finding a solution is a priority for us," Harmon said in an e-mail. "We want to put an end to these tariffs."

Michael Marsh, CEO of the Western United Dairymen trade group, said Mexico's new 20 to 25 percent tariffs on cheese may drive up domestic supplies and reduce milk prices for beleaguered dairy farms.

"Mexico is one of our biggest export markets," he said. "Our farmers need every dollar they can get."

Mexico's retaliatory action is disproportionate and likely violates its trade agreements with the U.S., he said.

"Their action against our product is arguably different than sending dirty diesel trucks into California," Marsh said. "This action by the Mexican government has to be rescinded."

The Mexican government has probably geared the tariffs to impact certain states with influential lawmakers, such as Sen. Patty Murray, D-Wash., who sits on the powerful Senate Appropriations Committee, said Mike Powers, vice president of the Northwest Horticultural Council.

"The intent, I'm sure, is to exert political pressure," he said.

Since tariffs were imposed last year, Northwest orchardists have lost about $25 million due to decreased sales and lower prices, Powers said.

"We're already getting hammered. Mexico is our top export market," he said. "Our growers have been paying the price since the very beginning."

The new tariff on apples alone is estimated to inflict another $44 million in economic damages to growers, he said.

"That's money that would have been flowing into these rural economies," Powers said. "That's a lot of money into these regions."

Dave Warner, spokesman for the National Pork Producers Council, said the 5 percent Mexican tariff on U.S. pork products will benefit rival exporters to that country, such as Canada and Chile.

"It certainly will have a negative effect," he said.