After more than a year of protests by the U.S. rice and cattle industries, the Bush administration has decided to file a WTO case against Mexico's anti-dumping orders on U.S. beef and long grain rice.

U.S. Trade Representative Robert B. Zoellick announced the filing at a press briefing in Washington. The consultations will also cover aspects of Mexico's recently amended antidumping and countervailing duty laws, which, analysts say, could affect other U.S. industries.

Since implementation of the North American Free Trade Agreement, Mexico has become the third largest market for U.S. food and agricultural products.

“Trade remedies are an essential part of the rules-based international trading system — but they must be used in accordance with those rules,” Zoellick said. “By filing a WTO case, we are working to insure that Mexico doesn't use foreign trade remedy laws as unfair barriers to U.S. products, and that these laws are administered in a transparent and predictable manner in accordance with WTO rules.

“American ranchers and rice farmers expect to have fair market access for their products in Mexico.”

“It is unfortunate that we could not resolve these matters bilaterally,” said Agriculture Secretary Ann M. Veneman. “But, we have been patient and now must insure that the trade agreements are fully enforced.”

In 2002, the United States exported $829 million of beef products and $103 million of rice to Mexico. In its consultation request, the United States identified numerous apparent violations of Mexico's obligations under several WTO agreements, including:

  • The Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Antidumping Agreement);
  • The Agreement on Subsidies and Countervailing Measures (SCM Agreement);
  • The General Agreement on Tariffs and Trade 1994 (GATT 1994).

Zoellick said these violations relate to various procedures and methodologies Mexican authorities used in the beef and rice investigations and to the requirements of the Mexican legislation.

In particular, the consultations will cover issues such as Mexico's choice of data used in the investigations, its methodology for determining whether the Mexican industries were injured by reason of dumped imports, its failure to terminate the investigations when it found that dumping or injury were not occurring, its calculations of dumping duty rates applicable to imports and its non-transparent determinations.

If the consultations fail to resolve the dispute, Zoellick said, the United States could proceed to request the establishment of a panel to consider the U.S. complaints on these or related issues discussed in the consultations.

Mexico imposed antidumping duties on U.S. beef in April 2000, and on U.S. white long grain rice in June 2002. In addition, Mexico passed amendments to its antidumping and countervailing duty laws in December 2002.

Under international trade laws, one country accuses another of “dumping” when it believes products are being imported below their cost or home-market price and the country believes its own producers are being injured by those imports.

Today's consultation request is the first step under WTO dispute settlement rules. If the consultations fail to resolve the dispute within 60 days, the United States will be entitled to request that a panel be established to consider the U.S. complaint and determine whether Mexico is acting in accordance with its WTO obligations.

The WTO dispute settlement process takes about 18 months, if there is an appeal.

The United States previously brought WTO challenges against Mexico's antidumping investigations of high fructose corn syrup and swine. Mexico withdrew both orders as a result of these challenges.

Mexico's antidumping measure on beef is already the subject of a case that the U.S. beef industry brought under Chapter 19 of the North American Free Trade Agreement. The NAFTA case is addressing whether the Mexican determination is consistent with the legal requirements of Mexico's antidumping law.

The case being filed now involves a broader number of issues. It will examine whether the determination is consistent with WTO rules. A decision in the NAFTA case is expected by the end of August.

The U.S. rice industry's fight with Mexico goes back to December 2001, when the Mexican Rice Council filed a petition with its government accusing U.S. exporters of selling Mexico milled rice for less than it was being sold in this country.

In June 2002, the Mexican government published a determination that the Mexican rice millers had been injured. They assessed anti-dumping penalties of up to 10.18 percent for all U.S. companies that ship long-grain milled rice, including some that had never shipped such rice in the past.

“In the petition that the Mexican rice industry sent to their government, they alleged the rate of dumping was 10.18 percent,” according to a spokesman for the USA Rice Federation. “How they came up with that number was they said U.S. companies were selling rice to Mexico that was for 10.18 percent less than they sell it for in U.S. markets. We, quite frankly, couldn't believe what had happened. We saw no basis for that rate.”