WASHINGTON, D.C.-The National Potato Council is calling on the Obama Administration and Congress to either reinstate the funding required to continue the pilot program allowing Mexican trucks into a limited area within U.S. border states, or to quickly develop an alternative program that is consistent with U.S. trade obligations to Mexico. The current pilot program was developed to satisfy a 2001 arbitration panel's decision which found the U.S. was not fulfilling its NAFTA trucking commitments.
In the Omnibus spending bill to fund FY 2009 government programs, Congress eliminated funding for this pilot program. This action by Congress, coupled with the arbitration panel's earlier decision allowed Mexico to exercise its right to retaliate against U.S. imports. Mexico is the third largest market for U.S. frozen potato exports, and this level was achieved with constant and consistent growth in exports since NAFTA's implementation.
"The United States has enjoyed a very high market share in Mexico for frozen potato products," said NPC President Ed Schneider. "Congress' decision to eliminate this funding is particularly ironic in light of the hundreds of billions of dollars it recently approved and spent on behalf of economic stimulus programs to create jobs. Not honoring our trade commitments jeopardizes America's trading future, increases job losses and further damages our economy." Schneider is a farmer from Pasco, Wash., and grows potatoes supplied to the frozen potato processing market.
Frozen potato products from the United States will now be at a 20 percent tariff disadvantage to Canadian products which will remain at the zero tariff established by NAFTA. According to United States Potato Board International Marketing Vice President John Toaspern, it is estimated that U.S. exports of frozen potato products will decline by roughly 25 percent in the short term (April-June), 30 percent in the midterm (July-September) and 30 to 40 percent in the longer term (October-September 2010) as Mexican importers move to alternative suppliers. If the 20 percent tariff were continued for 2010, the sales loss to the U.S. potato industry would be about $40 million.
In February 2009 the NPC joined more than 80 other groups in signing a letter to President Obama urging him to resist all efforts to halt or impede the U.S. Department of Transportation's Cross Border Trucking Pilot Program with Mexico. Signatories to the letter included General Electric, American Trucking Association, Nestle USA, ConAgra Foods, U.S. Chamber of Commerce, Caterpillar, Panasonic, PepsiCo, and virtually every major agriculture organization. Both the Congress and the Administration need to be made aware of the fact that the impact of their action to eliminate the Mexican truck pilot will be a loss of jobs at home.