Mexican Cheese Tariffs Could Have Been Worse

August 23, 2010 03:38 AM

IDFA Opposes Mexican Cheese Tariffs, Achieves Rate Reduction

Mexico announced plans this week to impose tariffs on a variety of U.S. exports, including four categories of cheese, as a retaliatory measure in the ongoing trade dispute over the U.S. ban on Mexican trucks.
International Dairy Foods Association (IDFA) opposes the new tariffs and, as an interim step, was able to lessen the impact for members by achieving a significant reduction in the tariffs for these cheeses.
IDFA learned several months ago that the Mexican government was contemplating a new list of tariffs and that dairy products would likely be included. Taking a two-pronged approach, IDFA joined with other food industry organizations to urge the U.S. administration to lift the ban and allow the trucks to enter, which would fulfill obligations to Mexico under the North American Free Trade Agreement.
At the same time, IDFA hired a consultant to work with Mexican officials. Although IDFA was not able to keep cheese off the list, it was successful in decreasing the tariff limit.
Tariffs Reduced to 25%
"As a direct result of IDFA and its consultant working with the Mexican government, the tariffs on cheese have been reduced from the initially proposed rate of 125 percent to 25 percent," said Clay Hough, IDFA senior group vice president.
The affected cheese products include fresh cheeses, such as cream cheese and Mozzarella; processed cheese; certain types of Grana or Parmegiano-reggiano, Danbo, Edam, Fontal, Fontina, Fynbo, Gouda, Harvarti Maribo Samsoe, Esrom, Italico, Saint-Paulin and Taleggio; and others, such as Cheddar, Colby, Monterrey Jack and Provolone.
Until yesterday, when the tariffs became effective, all U.S. cheeses had duty-free access under NAFTA.
The current dispute began in March 2009, when President Obama signed an appropriations bill that eliminated the funding for the U.S. Department of Transportation's Cross Border Trucking Pilot Program with Mexico, which allowed Mexican trucks to deliver goods to U.S. destinations. Some legislators had criticized the program, questioning the safety of the trucks and the lack of safety records on the drivers.
In response, Mexico imposed retaliatory tariffs on $2.4 billion worth of imports from the United States, but no U.S. dairy products were included on the 2009 list. Mexican officials have continued to express their frustration with the administration's lack of attention to the issue but waited until this week to take further action.
Mexico Remains Key U.S. Export Destination
"We will continue to work with our industry partners to further minimize, if not eliminate, the impact that the trucking dispute is having on U.S. dairy exports to Mexico," Hough said.

Mexico is one of the dairy industry's largest export destinations. According to the U.S. Dairy Export Council, American exports in the four cheese tariff lines totaled 44 million pounds so far this year and are estimated to be worth $59 million.

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