Agreement on Mexican Tariffs on U.S. Exports Good News for U.S. Dairy Foods Manufacturers

U.S. dairy exports to Mexico under NAFTA have increased at a steady rate over the past decade, becoming by far the industry's largest export market.

3/8/2011 --- In a positive development for U.S. dairy exporters, President Barack Obama and Mexican President Felipe Calderon yesterday announced an agreement to resolve the longstanding dispute that has resulted in Mexico levying tariffs on U.S. exports, including many cheeses.

"This announcement represents a clear path forward to resolve the dispute," said Clay Hough, IDFA senior group vice president. "IDFA thanks the Obama administration and the Mexican government for moving forward with this agreement. We encourage the administration to work closely with Congress to ensure full implementation of our commitments and end the tariffs that have threatened access to the U.S. dairy industry's largest export market."

The tariffs have legally been in place since March 2009 as a result of U.S. failure to comply with the North American Free Trade Agreement (NAFTA) obligations to allow Mexican trucks to cross into the United States due to safety concerns. In August 2010, the tariffs were expanded to include several cheeses.

U.S. dairy exports to Mexico under NAFTA have increased at a steady rate over the past decade, becoming by far the industry's largest export market. Last year Mexico imported over $837 million of U.S. dairy products, which was more than double the value of U.S. dairy exports to the industry's second largest export market. However, the U.S.-Mexico dispute had threatened this market share and forced some Mexican buyers to seek alternative suppliers of the targeted cheeses.

A White House fact sheet detailing the agreement indicated that Mexico will suspend its retaliatory tariffs in stages, beginning with reducing tariffs by 50 percent at the signing of an agreement. It will suspend the remaining 50 percent when the first Mexican carrier is granted operating authority under the program.

IDFA will continue to push for the lifting of tariffs targeting dairy products. When the tariffs affecting U.S. cheeses were first announced in August 2010, IDFA worked with Mexican officials to reduce the initially proposed tariff rate of 125 percent to 25 percent.