Mexico to Impose Duty on Apples

Mexico turned up the heat in a long-running trade dispute Friday, imposing a 40% tariff on U.S. apples and accusing U.S. growers of dumping cheap fruit on its domestic market.

If the tariff remains in place for long, it could have serious repercussions for U.S. apple growers, who have seen prices drop sharply in recent years because of overproduction and cheap foreign competition. Since the signing of the free-trade agreement between the U.S. and Mexico in 1994, disputes over apples, tomatoes, sugar and avocados have made agriculture one of the most contentious arenas in the bilateral relationship.

The U.S. government is expected to challenge the decision.

Desmond O’Rourke, an agriculture consultant, said a 40% tariff on Red and Golden Delicious apples could sharply reduce U.S. sales to Mexico, which bought $125 million worth of apples in 2001 and is the leading U.S. apple export market with 30% of foreign sales. That would push more apples into the global market and depress prices. “The impact would be very severe if it continues for long,” he said.

The Mexican government faces fierce pressure from apple growers in Chihuahua, who initially filed an anti-dumping complaint against U.S. growers in 1997. After Mexico imposed a 101% tariff on U.S. fruit, which froze the U.S. out of that market for months, the two sides set a minimum price for U.S. apples sold in Mexico. But Mexican growers challenged that agreement in court, and the government reopened the dumping case.

Bill Bryant, a Seattle-based lobbyist representing the U.S. apple industry, expects the two sides to return to the negotiating table soon. “We had been working with the Mexican government for months, and I hope we could continue to work with them to develop a mutually acceptable solution,” he said.

As news of Mexico’s decision filtered through the U.S. apple-growing community on Friday, trade activity ground to a halt, said Rebecca Baerveldt, international marketing manager for the Washington Apple Commission, whose growers produce more than half of the nation’s apples. “Just the rumor of the reimposition of the tariff has basically halted sales because the importers don’t want to be stuck with having to deal with that high of a tariff,” she said.

After four years of rock-bottom prices, business was starting to look up for U.S. apple growers. Apple prices averaged 23 cents a pound in 2001, up from 18 cents a pound the previous year. Until Friday’s news, apple prices were expected to remain firm for the next harvest, which begins in the coming weeks.