National Potato Council - US frozen potato exports to Mexico will decline after truck funding elimination

The National Potato Council (NPC) 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. 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.

Frozen potato products from the United States will now be at a 20% tariff disadvantage to Canadian products which will remain at the zero tariff established by NAFTA. According to United States Potato Board (USPB) International Marketing Vice President John Toaspern, it is estimated that U.S. exports of frozen potato products will decline by roughly 25% in the short term (April-June), 30% in the midterm (July-September) and 30 to 40% in the longer term (October-September 2010) as Mexican importers move to alternative suppliers. If the 20% tariff were continued for 2010, the sales loss to the U.S. potato industry would be approximately $40 million.

“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.”

Source: National Potato Council