Aug 06, 2020
ASA joined a diverse group representing various sectors of the ag industry this week on a letter urging U.S. Trade Representative (USTR) Robert Lighthizer to pursue a negotiated bilateral resolution addressing trade distorting policies that may be contributing to unfair pricing in the U.S. market and causing harm to U.S. seasonal and perishable producers in U.S. commerce. The letter was submitted as testimony to USTR for two upcoming hearings on seasonality.
The groups caution that imposing tariffs or other retaliation against seasonal produce from Mexico would have widespread adverse effects across the U.S. ag industry.
“Although we support the Administration’s efforts to address unfair trade practices and to hold trading partners accountable, we are concerned that punitive measures levied against seasonal fruits and vegetable imports from Mexico, in particular, would inflict undue retaliatory harm on U.S. agricultural producers and undermine the hard-fought gains won in USMCA,” the groups state in the letter. “As you are aware, the U.S. agricultural industry has often been the primary target of retaliation by foreign governments engaged in trade disputes with the U.S., and is likely to once again bear the brunt of retaliation if actions are taken to restrict trade in seasonal produce from the Mexican market in a manner not keeping with U.S. trade commitments.”
Mexico is the #2 market for whole beans, meal and oil, and Canada is the #4 buyer of meal and #7 buyer of oil for U.S. soybean farmers. The U.S. Mexico Canada Agreement, which went into effect on July 1, is essential to sustaining the growth realized in the U.S. and Mexico under the North American Free Trade Agreement (NAFTA). Under NAFTA, U.S. soybean sales to Mexico quadrupled and to Canada doubled.
During USMCA negotiations, there was a push by produce growers in the Southeast to include language that would make it easier for American growers to make the case that Mexico is selling produce at unfairly low prices when certain crops are in season in a particular region. This would have allowed growers to bring anti-dumping and countervailing duty cases based on seasonal and regional data. Current trade law requires three years’ worth of annual data to bring those same charges. That language was withdrawn during negotiating, but USTR promised to hold a hearing on the issue no later than 60 days after USMCA entered into force.
As U.S. soy growers face challenges due to the COVID-19 pandemic and an already down soybean market situation resulting from the ongoing U.S. China trade war, a retaliatory tariff from Mexico would be a devastating blow.
“At this especially challenging time, rural America cannot afford to shoulder the expected additional costs and loss of market demand associated with retaliation, nor can the U.S. agricultural industry realize the benefits of the USMCA if it is priced out of its second largest export market,” the letter states. Read the full letter here.