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Big effort made to re-open Mexican border
June 25, 2003

Efforts were at the highest levels of USDA and the U.S. Trade Representative to convince Mexico to stop defying the North American Free Trade Agreement (NAFTA) and blocking U.S. dry bean imports.

On Jan. 21, 2003 Mexico closed the border to U.S. and Canadian dry beans without notice. Since then it has alleged that the U.S. beans do not meet phytosanitary regulations, that companies bought foreign beans and passed them off as produced in North America and that U.S. companies were dumping dry beans on the Mexican market below purchase prices.

The U.S. dry bean industry's position via the National Dry Bean Council - which the Northarvest Bean Growers Association shares - is that Mexico has failed to provide legal justification for the closure of the border, and has neglected to honor the provision under NAFTA that provides for dialogue, shared information and cooperation.

A summary of Mexico's allegations, followed by the U.S. bean industry's response to them in italics, are:

Violation of phytosanitary regulations. No proof has ever been given and Mexico issued new regulations for fumigation that are not based on science and grading standards for odor, cooking time and other standards that cannot be met.

Underinvoicing. Mexico claims the U.S. is dumping beans in Mexico below market prices. Government officials are comparing invoices against prices reported in the "U.S. Bean Market News." These prices are for  current crop, U.S. No. 1 grade. Many beans that go to Mexico are U.S. No. 2s, 3s and splits and could be from previous crop years. Furthermore, in some cases, deposits are made in advance of delivery. Two invoices would be required to reflect the actual price.

Triangulation. Mexico alleges that U.S. companies bought beans from other countries and resold them in Mexico as North American beans. Mexico has not provided proof. There are processes to deal with this without closing the border to legal trade. The U.S. bean industry supports prosecution of any company proved to be guilty of such activity.

No demand. There is overproduction of beans in Mexico and they do not need imports. There is not over production of all bean classes in Mexico, especially in some of those classes that the U.S. ships to Mexico Ð i.e. black beans. Also, some Mexican buyers buyers prefer U.S. product to local product, regardless of Mexican production levels.

Unfair competition. Mexican producers claim they cannot compete with U.S. producers. The over-quota tariff on U.S. dry beans between 1994 and 2003 averaged 101.27%, beginning with 133% in 1994 and 58.7% in 2003. Current annual dry bean consumption in Mexico is estimated at just less than 1 million metric tons. U.S. dry beans account for only 5-7% of the total consumption.

Closing the border may have more to do with politics than anything else. It's an election year in Mexico. Closing the border may be part of the government's strategy to raise domestic bean prices and win farmer's votes.


TIMELINE

Jan. 21
Mexico closes the border to U.S. and Canadian dry beans without notice. Does not give a reason.
Jan. 22
ATO in Mexico tries to find out why the border was closed. Meeting does not yield an answer.
Jan. 24
Memo from SAGARPA agents to not allow U.S. and Canadian product in for phytosanitary reasons.
Jan. 31
List of rail cars stuck and border sent to ATO in Mexico City.
Feb. 3
ATO sends letter to asking for justification of border closure.
Feb. 7
USTRA sends letter to Mexico counterpart asking for proof of valid phyto issue. SAGARPA says that it is not a phytosanitary issue but a smuggling issue. U.S. and Canadian product that entered the country prior to Jan. 21 has been in bonded warehouses and will not be released.
Feb. 10
USDA undersecretaries send letter asking for clarification.
Feb. 11
FAS Minister and Counselor in Mexico sends letters to Mexican government counterparts asking for justification.
Feb. 13
NDBC trade delegation meets with Minister Counselor and ATO in Mexico City.
Feb. 14
NDBC send letter to USDA Secretary Ann Veneman requesting increased efforts and letter to USTRA requesting WTO consultations.
Feb. 20
FAS administration speaks to counterpart in Mexico. She is told that cars at border would be allowed to cross immediately.
Feb. 21
Government of Mexico makes allegation that Òunder invoicingÓ is the problem and proposes a reference price system using USDA/AMS Bean Market News.
Feb. 28
List of rail cars stuck at border is given to SAGARPA (Mexican Department of Agriculture) at its request.
March 1
Mexico fails to hold auction for 1/3 of the trade quota volume as provided for in the May 2001 understanding.
March 5
SAGARPA holds meeting with direct assignment committee members.
March 6
NDBC meets with USDA undersecretary and USTR director of agriculture affairs and technical barriers to trade. Government of Mexico asks imports who have product at border to register by noon tomorrow, indicate that cars will be allowed to cross in 15 days. USDA talks to SAGARPA and discuss terms for cars crossing. Mexico says product must go into bonded warehouses and go toward the 2003 quota.
March 7
Registration deadline at noon for rail cars at border.
March 25
USTR submits letter to WTO requesting Mexico provide a reason for its actions. April 8 is the deadline.
March 26
USDA Secretary of Ag speaks with Mexican ambassador.
March 28
USTR send s letter to Mexican counterpart. USDA and USTR send letters to Mexican trade negations.
April 1
USTR raises bean issue at WTO meetings in Geneva.
April 4
Government of Mexico announces that auction will be held May 9 and in July for import permits, publishes new phytosanitary regulations requiring fumigation with methyl bromide, new labeling requirements, two different phytosanitary inspections (one at the border and one at the shipping point), certification that beans are free of 24 pests or dis
eases of which many occur only on the plant, not on the bean; new grading standards, specific product characteristics such as cooking time range.
April 9
USDA APHIS instructs field office not to issue phytos to Mexico until further notice.
April 23
USTR ambassador, USDA undersecretary meet with Mexico counterparts. Mexico officials say beans will be released, but not
clear when. Officials promise to look at regulations, but will not suspend them. When asked for proof of phyto concerns, under invoicing and triangulations, Mexico officials said they would provide proof before the end of the meeting but never did.
April 29
Mexican government issues instruction to allow beans in bonded warehouses to be released at 58.7% tariff rate effective immediately, but have not
been able to confirm that this, in fact, was the case.
May 5
NDBC meets with USDA undersecretaries and House Ag committee.
May 7
U.S. Secretary of State meets with Mexican Counterpart to discuss ag issues; beans are discussed.
May 8
Senator Chuck Grassley, chairman of the Senate Committee on finances, sends letter to Mexico, mentions bean issue.
May
NDBC meets with Senate Ag committee staff on issues. Mexico hold auction for 1/3 of the tariff rate quote, but phyto regulation prevents shipping.
May 15
Mexican Senators meet with U.S. Senate Ag Committee.
May 30
Mexican lifts phyto regulation, says border will be open.


 

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Northarvest Bean Growers Association | 50072 East Lake Seven Road | Frazee, MN 56544
Ph: 218-334-6351 | Fax: 218-334-6360 | Email: nhbean@loretel.net