With the majority of this year’s apples off the trees, now comes the job of marketing and selling them both at home and abroad. Over $1 of every $4 in returns to the apple industry comes from exports. Thanks to the innovations of our industry and the savvy utilization of export promotion programs, such as the Market Access Program (MAP), export numbers are on the rise. In 2009, American apples were exported to 60 countries, for a record value of nearly $800 million.
However, a North American Free Trade Agreement dispute on cross-border trucking threatens to reverse this trend. U.S. apples destined for Mexico, our largest export market, are subject to a 20 percent duty, which took effect August 19.
Under NAFTA, the United States agreed to a cross-border trucking program with Mexico to be phased in beginning in 1995. However, the program was delayed for twelve years due to political pressures from the International Brotherhood of Teamsters, who raised concerns regarding the safety of the Mexican trucks and the potential impact on American jobs. In 2007, a cross-border pilot program was launched. Under the program, Mexican trucks were required not only to operate under U.S. standards, but to meet 22 additional safety standards. During the demonstration program’s 18 months of operation, 26 Mexican carriers (with 103 trucks) and 10 U.S. carriers (with 61 trucks) crossed the border more than 45,000 times without a significant incident. Moreover, according to reports of both the U.S. Department of Transportation’s Inspector General and an independent evaluation panel, Mexico’s participating carriers have a safety record far better than that of all other carriers operating in the United States.
Despite the pilot program’s success, political pressure from the Teamsters continued until February 2009, when Congress voted to de-fund it, thereby terminating the program. In response to the United States’s failure to comply with its trade commitment, the Mexican government instituted retaliatory tariffs on $2.4 billion worth of U.S. manufactured and agricultural exports beginning in March 2009. Though apples were not initially impacted, fresh and dried apples were added to the list in August due to inaction by our government to resolve the trucking impasse.
The new tariff, if it remains in effect, could have a dramatic effect on the marketing of this fall’s apple harvest. If our market share in Mexico slips, the impact will be felt throughout the domestic industry. In 2009, Mexico imported 11.5 million boxes (bushels) of U.S. apples, worth $207 million. This represents 27 percent of total U.S. apple export value.
Our industry has built long-standing relationships with Mexican customers. The Mexican import tariff undermines our ability to be a reliable supplier of outstanding apples into this important market.
USApple urged President Barack Obama to resolve this dispute immediately and stop holding apple growers and other affected industries hostage. We are also encouraging key members of Congress to contact the White House on our behalf.
Strong apple exports help ensure greater demand for our excellent apples, which is vital to the health of our industry. Thus, exports to Mexico and across the globe are critical to all growers regardless of whether they are exporting their fruit. That’s why expanding foreign trade has always been a top priority for USApple—from pushing Congress to ratify pro-apple trade agreements like the Central America Free Trade Agreement to securing funding for export promotion programs such as the Market Access Program.
USApple pressed for a strong trade title in the 2008 Farm Bill with increased funds for MAP and the Technical Assistance for Specialty Crops. Since then, we’ve been working to ensure that the programs continue to receive full federal funding, a real challenge under the current budget constraints.
In 2009, the apple industry received nearly $6 million from the MAP program. These funds were matched with grower dollars to promote sales of apples around the world, from Canada and Mexico, to Central America, the United Kingdom, India, and Taiwan. In-store promotions, market research, and reverse trade missions (where buyers travel to the United States to tour operations and meet with growers and packing house operators) have had a positive impact on our export numbers even as we compete with lower-cost producers like China.
Technical Assistance for Specialty Crops is also an important federal export market development program for the industry. Funding from the program helps resolve phytosanitary and technical barriers that prohibit or threaten exports of U.S. apples and other specialty crops. TASC grants have been used successfully by a number of states to help offset costs associated with breaking into the Mexican market. Mexico requires the apple industry to pay the salary and living expenses for a Mexican inspector who lives in a given state for a number of years, regularly inspecting the orchards, packing houses, and other facilities. TASC grants have also been used to fund travel for U.S. industry and foreign officials to resolve nontariff trade barriers in some of our key export markets.
Work on the 2012 Farm Bill is already starting. USApple and others in our specialty crop coalition are gearing up, and one of our top priorities will again be to maintain and expand these important trade programs. We believe that MAP and TASC funding is critical to increasing apple exports, which can have a positive benefit on the economic health of all growers, large and small.