Mexico’s Economy Secretariat announced late last week that it would suspend remaining tariffs on a variety of U.S. goods, including dairy products. This action follows the announcement by the Obama administration that the first Mexican truck carrier had been granted cross-border operating status under the newly resumed cross-border pilot trucking program.

The tariffs were first levied in March 2009, when Congress passed an appropriations bill that eliminated the funding for the previous cross-border trucking pilot program with Mexico. The Mexican government imposed the tariffs legally in retaliation, because the United States is obligated under the North American Free Trade Agreement (NAFTA) to allow Mexican trucks to cross into the United States.  Because the trucking program remained stalled, Mexico expanded the tariffs in August 2010 to include several cheeses.

“The removal of the remaining tariffs is welcome news for U.S. dairy processors, as Mexico constitutes our industry’s largest export market,” said John Kelly, IDFA manager of international affairs. “It’s important that the U.S. remains committed to meeting our trade obligations so that we can continue to enjoy full duty-free access to the dairy industry’s largest export market.”

Under the terms of an agreement reached in July, Mexico removed 50 percent of the tariffs and had agreed to remove the remaining 50 percent when the first Mexican trucks received authority to operate under the pilot program. Mexico is by far the largest export market for U.S. dairy products, with over $746 million in exports this year. The tariffs had threatened U.S. market share in Mexico for several popular cheeses, including parmesan, cheddar, colby, Monterrey Jack and provolone, among others.

IDFA will continue to support the reciprocal fulfillment of trade obligations. When the tariffs affecting U.S. cheeses were announced in August 2010, IDFA worked with Mexican officials to reduce the initially proposed tariff rate on dairy products from 125 percent to 25 percent. In April 2011, IDFA also submitted comments to the Department of Transportation, supporting the trucking program.

For more information, contact Kelly at jkelly@idfa.org.