Mexican tariff hurts Washington farmers

A tariff imposed by Mexico on some agricultural and processed food products is hurting Washington farmers, with potato growers feeling the brunt of the nearly year-old trade dispute.

Mexico last year levied a 20 percent tariff on more than 90 U.S. agricultural and industrial products worth an estimated $2.4 billion. The move came after expiration of a pilot program that allowed a limited number of Mexican trucks access to U.S. highways.

The tariff in part contributed to a $19.7 million decline in the value of exported Washington agricultural products -- excluding soybeans, corn and rice -- to Mexico in 2009 compared with 2008, according to the Washington Department of Agriculture.

And the state's spud growers are feeling the worst of it because Mexico included frozen potatoes on the tariff list.

Mexico is the No. 2 international export market for Washington frozen potatoes behind Japan, said Matt Harris, director of trade for the Washington State Potato Commission.

Washington sustained an estimated value loss of $14 million in frozen potatoes exported to Mexico from April to December 2009, according to the potato commission. That's half the total estimated loss of $28 million for all U.S. frozen potatoes sent south of the border, according to commission figures.

Mexico now looks to Canada for the bulk of its frozen french fries. And agricultural leaders fear Washington spud growers could permanently lose their share of the Mexican market and see job cuts in some food processing and handling facilities.

"It's hurt us," said Frank Martinez of Royal City, who grows processed potatoes between Odessa and Ritzville. "We've had the downturn in the economy and then we were hit with this tariff by Mexico. On top of the bad economy, it's been tough."

Martinez was contracted to grow potatoes for processing on 1,300 acres two years ago, but that acreage was cut to 800 last year. He saw another 10 percent reduction this year because of the tariff, he said.

"Mexico has been a good market for us and it takes a long time to develop a market like that," Martinez said.

Potato growers aren't alone. Washington pear exports to Mexico were worth $19.9 million from April to November 2008. From April to November 2009, the figure dropped to $8.79 million, a 56 percent decline, according to figures provided by Robert Hamilton, trade policy adviser to Gov. Chris Gregoire.

Cherry exports to Mexico in 2009 were worth $3.4 million, down from $3.5 million in 2008, although the 2009 crop was large and prices consequently were lower. Mixed nuts and berries and apricots also are among the Washington agricultural products exported to Mexico. In all, Washington in 2008 sent an estimated $86.8 million worth of products south of the border, ranking behind only California and Texas in agricultural exports to Mexico, according to state Department of Agriculture figures.

"We need every market we can get, and Mexico has an emerging market for cherries. It's a big deal to us," said B.J. Thurlby, president of the Washington State Fruit Commission and Northwest Cherry Growers.

It's uncertain when there might be a resolution of the dispute, which began last year when a pilot program ended that allowed a limited number of Mexican trucks access to U.S. highways. In response, and supported by a North American Free Trade Act dispute resolution panel, Mexico imposed the tariffs.

Congress approved and the president signed an omnibus spending bill that contained language terminating the pilot program in March 2009. The pilot program was intended to show that Mexican trucks and drivers could safely operate on U.S. highways beyond border areas.

But the Teamsters Union and some highway safety groups objected to the program, arguing Mexican trucks were unsafe. And in a speech in February to more than 200 Teamster local unions, Jim Hoffa, president of the International Brotherhood of Teamsters, affirmed his opposition.

"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," Hoffa said, according to a news release of the speech issued by the Teamsters.

Members of Washington's congressional delegation, Gregoire, other elected officials and industry groups are pushing the Obama administration and Mexican officials to end the dispute.

"The governor has raised this issue with administration officials," Hamilton said.

And on Thursday, Sen. Patty Murray, D-Wash., prodded Department of Transportation Secretary Ray LaHood to move faster on a plan to resume cross-border trucking from Mexico. She told him during a hearing of the Senate Transportation, Housing and Urban Development Appropriations Subcommittee that it was important to find a resolution that would address safety concerns but also preserve U.S. jobs.

"We are finalizing a plan; the reason it's taken so long is because there's a lot of moving parts, including about five different cabinet officials, and every time we make a tweak or a change everybody has to sign off on it. But we're very near a proposal that we think will meet all of the safety concerns that I heard when I talked to 25 members of Congress," LaHood said, according to a transcript released by Murray's office.

Language that eliminated funding for the trucking demonstration program was not included in the 2010 appropriations bill. U.S. Trade Representative Ron Kirk has met with Mexican officials about the tariff and told the Reuters news agency last month that talks with members of Congress and Mexico would intensify in the coming weeks.

But a top Mexican trade leader told the trade publication Inside U.S. Trade last month that Mexico would continue the tariffs until the trucking issue is resolved. Beatriz Leyecegui, Mexico's undersecretary for trade, told the publication that Mexico wanted a more permanent resolution beyond just reviving the pilot program to give Mexican trucks access again to U.S. highways.

"The longer this goes on," Harris said, "the more it hurts our growers."