You win some and you lose some, and it appears the United States has won one in the World Trade Organization for a change. A WTO dispute panel ruled that Mexico unfairly imposed anti-dumping tariffs on U.S. rice.
While dispute panel reports technically are confidential until translated and adopted by members of the WTO, news accounts indicate the Mexican anti-dumping ruling is mostly favorable to the United States, USA Rice Federation officials said.
“This reported WTO finding that Mexico violated its WTO obligations by imposing anti-dumping duties on imports of U.S. long-grain white rice is good news for Southern rice producers and good news for Mexico's consumers,” said USA Rice Federation Chairman Lee Adams.
The apparently favorable decision in the rice case comes after WTO dispute and appellate panels ruled against the U.S. cotton program in a case brought by Brazil. The latter claimed its farmers were hurt when the U.S. farm program caused cotton prices to decline.
In June 2002, the Mexican rice industry also claimed its producers were being damaged by sales of U.S. rice to Mexico at unfairly low prices, according to the USA Rice Federation.
“The U.S. rice industry mounted a vigorous defense within Mexico but did not prevail and Mexico imposed tariffs as a remedy,” a USA Rice official said. “The United States then took Mexico's action to the WTO dispute panel, charging that Mexico's action and certain aspects of Mexico's Foreign Trade Law violated the WTO's Antidumping Agreement.”
Mexico's actions stemmed, in part, from the unhappiness of members of its rice industry over the phase out of Mexico's 20 percent tariff on rice imports. The North American Free Trade Agreement required Mexico to reduce the tariff by 2 percent per year over 10 years.
When the complaint first arose, the Mexican rice industry audited the records of three U.S. companies that were shipping milled rice to Mexico. After reviewing the findings, the Mexican government placed a 4 percent tariff on imports by one of the companies. But it also placed a 10 percent tariff on shipments from all other U.S. companies.
“We weren't even shipping rice to Mexico at the time,” said Keith Glover, president and CEO of Producers Rice Mill Inc. in Stuttgart, Ark. “But they claimed we were dumping. It was ridiculous.”
USA Rice representatives met with Mexican officials to challenge the tariff on numerous occasions but were unable to get the latter to drop the new tariffs. The U.S. government then took the dispute to the WTO.
Glover said he believes the matter was an attempt to undo some of the provisions of NAFTA. “It was nothing more than a sham,” he said.
Mexico currently is the No. 1 U.S. rice market, accounting for 17 to 20 percent of the total U.S. rice exports on an annual basis. The tariff levied by Mexico in 2001 applied to milled rice, which accounts for about 15 percent of U.S. shipments.
“The U.S. rice industry was concerned that if the Mexican rice industry was successful in re-establishing a tariff or penalty on the milled rice it would just be a matter of time before they would do the same with rough rice,” said Glover.
Shortly after the reports of the ruling began circulating, Mexico indicated it would appeal the WTO decision to “defend the interests of national production,” a Mexican Economy Department official said.
“This is a significant win for U.S. rice, the fact that there is an appeal means more work ahead,” said Bob Cummings, USA Rice's vice president for international policy.