Leaders of Washington’s apple industry, largest in the nation, admit they were caught off-guard by huge anti-dumping tariff increases on exports to Mexico.
With the announcement a week ago, sales were canceled and shipments diverted for fear the price of U.S. apples in Mexico would be doubled.
According to estimates by groups such as Northwest Fruit Exporters, which negotiates trade protocols with foreign countries, the shipment of 100,000 boxes of apples to Mexico this season has been stalled.
“It is a serious situation for those shippers with inventory and shipping plans for Mexico,” said Jim Archer, manager of Northwest Fruit Exporters.
“It denies the industry access to its No. 1 export market,” said Kraig Naasz, who handles trade issues for the Northwest Horticultural Council. “It is complicated by the fact that there appears to be no immediate institutional recourse.”
Mexican importers purchased more than 5.5 million boxes of apples in the 1996-97 season from Washington, Oregon and Idaho, the only states permitted to ship apples south of the border. That was nearly 20 percent of total apple exports and nearly 6 percent of the crop.
Archer’s group recently concluded negotiations for the 1997-98 shipping season to Mexico. The industry-funded program will cost shippers $797,000 for the record-keeping and verification required for access to Mexico.
Shippers and producers say they can refute complaints filed in December by Chihuahua growers who said Pacific Northwest apples were sold in Mexico during the first half of 1996 at half the price that apples of the same grade and size brought in the United States. Nonetheless, the 101.1 percent duty remains in effect pending a final decision in about four months.
Mexican importers still can accept U.S. apples at a fraction of the anti-dumping tariff but must post a bond and be prepared to pay the full tariff if it is made permanent.
The potential liability, uncertainty and confusion have caused business to grind to a halt, Archer said.
Even if they win a favorable ruling in February, apple shippers will have been shut out of Mexico through the start of the high-volume shipping period, Naasz added.
“If nothing is resolved, that kind of tariff will really make it almost prohibitive to go down there. They raise a lot of fruit themselves,” said John Eakin of Eakin Fruit Co. in Yakima. “It’s awfully difficult to come in at 121 percent of fair market value and be competitive.”
Eakin said he was still optimistic about getting the tariff lifted.
“I don’t want apple growers to read about this and be convinced that the Mexican market is totally gone forever. We don’t like the situation. We are working on it,” he said. “Everything is subject to review and subject to appeal. As a consequence, we have a blip in the road that I think will get resolved.”
In the dispute, Mexican growers have submitted some sales invoices and reports from the U.S. Department of Agriculture’s Market News Service. U.S. shippers and Mexican importers countered with their own sales records.
The United States also has accused Mexico of violating its own trade laws and the requirements of the North American Free Trade Agreement and the World Trade Organization’s anti-dumping codes, Naasz said. The two countries are signatories to both agreements.
Moreover, Naasz said the immediate imposition of tariffs was contrary to the typical NAFTA procedure of notification followed by a comment period before anti-dumping duties take effect.
The apple tariffs follow a 13 percent overall increase in U.S. exports of fruit to Mexico last year.
Mexico still ships 10 times as much fruit to the United States as there is shipped the other way, but the weakness of the Mexican economy has resulted in growing pressure on Mexican politicians to seek some relief under NAFTA, said Robert E. Scott, an economist at the Economic Policy Institute in Washington, D.C.
“If Mexico’s intent was to send a message on broader trade issues, I believe that message will backfire because of the reaction it is likely to generate among our government officials,” Naasz said.