WASHINGTON – The
United States announced today that it has successfully worked to ensure that
U.S. poultry exports will continue to be exported to Mexico with preferential
access, forestalling possible Mexican action that could have resulted in
significant trade disruption.
On January 1,
under the North American Free Trade Agreement (NAFTA), Mexican tariffs on U.S.
poultry exports fell to zero. However, under NAFTA, Mexico could have taken
action to impose a "safeguard" or emergency import tariff of up to 240 percent
on U.S. poultry exports, which is the tariff that countries without a
preferential arrangement with Mexico pay. Instead, Mexico will allow 50,000
metric tons of U.S. chicken leg quarters into Mexico duty-free over the next six
months and will impose a temporary, or provisional, safeguard tariff of 98.8
percent on imports of chicken leg quarters above that level. All other U.S.
poultry exports will continue to enter Mexico duty free.
"By working with
Mexico, in consultation with the U.S. poultry industry, we've been able to
ensure that U.S. poultry will continue to flow to Mexico at levels comparable to
the last few years, while we continue to work on larger issues related to
NAFTA's implementation," said U.S. Trade Representative Robert B. Zoellick.
"Under NAFTA, Mexico could have imposed a safeguard tariff to protect its
industry that could have seriously disrupted our poultry trade. Because of
factors unique to the poultry industry, we preferred, in this case, to work on
positive and practical solutions to keep poultry exports flowing. I'm pleased
that the U.S. poultry industry supports our efforts and that Mexican consumers
will have continued access to high-quality U.S. poultry."
"We have been
working hard to keep the Mexican market open for U.S. poultry exports in the
face of a number of recent challenges," said Agriculture Secretary Ann M.
Veneman. "This provisional safeguard will help to preserve preferential access
for U.S. poultry in our third largest market. While the safeguard is in place we
will continue to work with the Mexican Government and the poultry industry to
ensure long-term access for U.S. exports."
measure will take the form of a tariff-rate quota (TRQ). The first 50,000 metric
tons of chicken leg quarters exported in the next six months – approximately the
same rate at which the United States exported chicken leg quarters to Mexico in
2001 – will enter Mexico duty free. Additional U.S. exports of chicken leg
quarters in this six month period will be subject to a 98.8 percent tariff,
which was the 2001 tariff level. Mexico's most-favored-nation (MFN) tariff rate
for U.S. chicken leg quarters is 240 percent. Citing "critical circumstances,"
Mexico has decided to impose the provisional measure for six months, effective
immediately, while its full safeguard investigation continues. The United States
will continue to work with Mexico on a longer term measure, which under NAFTA
rules would require Mexico to provide offsetting trade compensation.
The U.S. is fully
committed to the effective implementation of NAFTA because of the benefits it
provides to families, farmers, workers, businesses, and consumers on both sides
of the border. The issue of the NAFTA poultry tariffs and the Mexican safeguard
is a novel and complicated situation, involving close cooperation between the
U.S. government with the U.S. poultry industry. Therefore, it should be viewed
as a unique approach designed to ensure that trade flows continue at high
levels, and not as any new across-the-board approach to implementing
Unrelated to the
safeguard action taken by the Mexican Ministry of Economy, the Mexican Ministry
of Agriculture (SAGARPA) maintains certain restrictions on imports of U.S.
poultry due to animal health requirements. On January 21, SAGARPA announced that
poultry from California and Nevada was banned due to an outbreak of Exotic
Mexico, the United States and Canada have the right to take emergency
"safeguard" action and temporarily increase the rate of duty on a product to MFN
tariff rates if, as a result of reducing or eliminating a duty, increased
imports of the product constitute a substantial cause of serious injury, or a
threat of serious injury, to a domestic industry producing a like or directly
competitive product. NAFTA also requires that the affected parties mutually
agree on trade liberalizing compensation equal to the trade effect resulting
from the safeguard.
Mexico maintained a TRQ on imports of U.S. poultry until December 31, 2002. As
of January 1, 2003, all U.S. poultry has entered Mexico duty free. However, on
September 10, 2002, the Mexican poultry industry filed a petition requesting the
imposition of a safeguard measure on U.S. chicken leg quarters. The Mexican
Ministry of Economy initiated a safeguard investigation on November 21, 2002.
After concluding that eliminating tariffs on U.S. poultry has resulted in
"critical circumstances," Mexico announced on January 22, 2003, that is has
decided to impose a provisional safeguard while the full investigation
The U.S. poultry
industry, represented by the USA Poultry and Egg Export Council and the National
Chicken Council, fully supports the U.S. approach to this matter.
created by NAFTA has benefited the U.S. and Mexican agricultural sectors
immensely. Bilateral trade in agricultural products has increased substantially
since NAFTA's implementation. NAFTA has also contributed to increased
agricultural earnings and jobs in the rural sector. For example, increased
exports of U.S. agricultural products to Mexico have provided the Mexican
livestock sector with a low-cost, high quality, sustainable supply of inputs
such as feed grains, thus lowering Mexican farmers' production costs over