U.S.M.E.F. warns against downplaying pork duties
August 24, 2010
by Bryan Salvage
DENVER – Some U.S. pork cuts were added to the list of products subject to retaliatory tariffs last week, which stemmed from the cross-border trucking dispute between Mexico and the United States. Mexico’s tariff rate on U.S. ham and shoulder cuts is now 5%, while its tariff on cooked skin pellets is 20%.
Mexico’s trade officials insist these tariffs will apply until a mutually satisfactory solution is found with respect to the North American Free-Trade Agreement (N.A.F.T.A.) trucking dispute.
Although many trade analysts have downplayed the impact of the 5% duty on hams and shoulders, on the assumption that the tariff rate is too low to have a significant impact on U.S. exports, U.S. Meat Export Federation President and C.E.O. Philip Seng said with Mexico’s economy and currency still struggling to recover, even a 5% duty will have a negative impact on Mexico’s consumers and on its meat-processing industry.
“A lot of our pork is going into further processing, which ultimately goes to the consumers. And as the prices of those ingredients go up, that’s going to get passed on to the consumer because ultimately they’re going to be paying for it. This is a concern. Looking at the situation as it compared to the pre-financial crisis, the peso is weaker than it was then when it was about 10 pesos to the dollar; now it’s about 12 pesos to the dollar.”
Even though the U.S. is the largest foreign supplier of pork to Mexico, the U.S. industry should not take this position for granted – especially since the new duties will apply only to U.S. pork and not to products from other pork-exporting countries, Seng said.
“In the Mexican market, primarily the commodity market, a 5% increase on our product vis a vis the competition is a major concern,” he added. “I remember long before the N.A.F.T.A. was initialed, the No. one supplier to Mexico was Denmark. I don’t foresee Danish pork going into Mexico in any large volumes but I am concerned that markets are very volatile and markets can change. Whether it’s 1% or 5% – anything that’s taking a pound of meat away from our exporters or taking a dollar out of our producers’ pockets, it’s something we have to be very concerned about.”