U.S. Cattle Producers Urge Speedy Resolution of Mexican Trade Conflicts

Washington, D.C. (September 25, 2003) – After years of cooperation with Mexican cattle producers on a wide variety of trade issues, U.S. cattle producers are increasingly frustrated with recent initiatives aimed at the destruction of this trading relationship. 

NCBA received news earlier this year that Mexican cattlemen filed a petition with their government asking for a safeguard due to a “surge” in beef imports. Also, since April 2000, the Mexican government has imposed a complex set of specific duties on most beef carcasses and cuts. Repeated delays in the North American Free Trade Agreement (NAFTA) panel’s decision regarding this anti-dumping tariff have left these duties on beef exports to Mexico in place for more than three years.

“There has been no ‘surge’ in U.S. beef imports to Mexico, and U.S. trade statistics reflect a steady increase and growth of that market,” says NCBA CEO Terry Stokes. “In addition, there is no legitimate reason to accuse our industry of dumping in the Mexican market and to impose such a complex system of tariffs on our exporters. We are frustrated with these unwarranted accusations.”

U.S. cattle producers are speaking out against these unjustifiable actions, as the tariff on beef trade between the two nations was established at zero in 1994. These arbitrary anti-dumping duties have since been imposed.

“The bottom line is that we will not re-open or re-negotiate NAFTA,” says Idaho cattle producer and NCBA President Eric Davis. “We need to put an end to these destructive trade maneuvers that will only distress both U.S. and Mexican markets.”

On the Possible WTO Safeguard

Mexico’s petition for a possible WTO (World Trade Organization) safeguard on all beef imports would have to meet the “surge” and “injury” criteria. NCBA sees no evidence that these criteria ever existed and the acceptance of such a case, when 2003 U.S. beef and variety meat exports to Mexico are actually down from 2002 levels, is inconceivable. The U.S. cannot ask for WTO consultations on a safeguard case until there has been a final determination by the Mexican government.

“We understand the Mexican cattle industry suffers from an inability to meet the country’s growing demand for beef,” says Stokes. “However, these problems stem from a persistent drought and the Mexican cattle ranchers’ inability to borrow money due to the absence of banking infrastructure in rural Mexico. They are not issues that have anything to do with the U.S. beef industry or NAFTA.”

“U.S. beef export market promotion efforts in Mexico, conducted by the U.S. Meat Export Federation and funded by the beef checkoff and U.S. taxpayer dollars via the USDA Foreign Agriculture Service Market Access Program and Foreign Market Development Programs, have paid great dividends for both Mexican and U.S. beef producers by increasing demand for all beef in Mexico,” explains Davis. “Remarkably, however, it seems that some in the Mexican cattle industry seek the old, failed ways of a protectionist system, rather than taking the necessary steps to resolve the many structural issues their industry faces and gain a better understanding of the marketplace.”

On the NAFTA Anti-dumping Duty

“The imposition of any safeguard tariff would be unprecedented, as it would go on top of the NAFTA anti-dumping duties that Mexico imposed on April 28, 2000,” says Stokes. “This decision continues to be a top concern of U.S. cattlemen, and a resolution on this issue is long overdue.”

In July of 2000, a NAFTA panel was first formed to rule on this issue but delays in selecting panelists meant that this panel didn’t begin its work until March 30, 2001. Earlier this year, NCBA was encouraged by the fact that, after more than two years, this panel was finally going to issue its ruling on June 10. Several days after this deadline passed, the decision was postponed until August 29, with no explanation given. Just days before this deadline, the decision was delayed again, this time until October 31, with no reasoning provided.

“We strongly object to this panel’s actions, or rather the lack thereof, and the lack of transparency in how it has conducted business," states Davis. “Historically, it has been assumed that panelists involved with the NAFTA dispute settlement process under Chapter 19 warranted the highest degree of trust, professionalism and respect. However, the inability of this panel to conduct its business in a timely and transparent way is indicative of its mismanagement.”

“The behavior of this panel undermines the credibility of our trade agreements and casts a dark shadow over the dispute settlement process. At a time when we are negotiating both free trade agreements and another WTO round in an unprecedented fashion, this type of behavior is simply unacceptable.”

Next Steps

U.S. cattle producers are asking the U.S. government to intervene in the hopes of coming to a resolution in both the dumping case and the possible WTO safeguard measure. Stokes testified this week before the Senate Finance Committee at a hearing titled: “Unfulfilled Promises: Mexican Barriers to U.S. Agricultural Exports.” In addition, a letter detailing the anti-dumping case was sent on September 9 to U.S. Trade Representative Robert Zoellick.

“This case has cost U.S. beef producers millions of dollars in lost beef exports to Mexico. Our industry’s future growth is dependent upon our ability to export, and we simply cannot let existing trading relationships slip, or take them for granted,” says Stokes. “There must be a firm commitment to existing agreements by industry stakeholders and the U.S. government.  This includes a constant fostering of relationships with our trading partners and constant vigilance with respect to maintaining compliance.”