The U.S. government will request the establishment of a World Trade Organization dispute settlement panel on Mexico's imposition of anti-dumping duties on shipments of U.S. long-grain, milled rice.

Rice farmers, industry leaders and rice-state members of Congress have been urging the Bush administration to counter Mexico's anti-dumping duties. Federation representatives said bilateral talks last month between the two countries failed to address U.S. concerns.

“This step is very good news for the U.S. rice industry,” said USA Rice Federation chairman Gary Sebree. “It emphasizes the fact our government leaders believe we have a legitimate case that has a good chance of winning.”

Sebree praised the work of U.S. Trade Ambassador Robert Zoellick and the USTR's chief agriculture negotiator, Ambassador Allen Johnson.

“They've been working hard on the resolution of this issue, and we'll support them in any way we can,” Sebree said. “These duties violate WTO rules and obviously go against the spirit of the NAFTA agreement.”

The settlement panel could be formed as early as December, and the two countries will submit briefs shortly after the panel is formed. It will likely be mid-2004 before the panel renders a decision, Sebree said. Mexico is the No. 1 export market for U.S. rice. Sales for the first seven months of 2003 totaled 485,000 metric tons.

The Senate Finance Committee, meanwhile, held a hearing on “Unfulfilled Promises: Mexican Barriers to U.S. Agricultural Exports” that included testimony from Travis Satterfield, a rice producer from Benoit, Miss., for the Delta Council of Mississippi, the USA Rice Federation, and the U.S. Rice Producers Association.

‘Serious blow’

“It is important for us to point out that Mexico's decision to impose punitive anti-dumping duties on certain imports of milled rice from the United States is a serious blow which threatens to erode the full benefits of NAFTA to U.S. rice producers, millers and exporters,” Satterfield told the committee.

Satterfield, who serves as chairman of the Delta Council Rice Committee, was asked to appear before the committee by Sen. Trent Lott, R-Miss., and a senate Finance Committee member.

“We value Mexico as our primary market for rice, but in the spirit of enforcing existing agreements and obligations which are critical to maintaining open markets, we hope that the U. S. government will consider the recent imposition of anti-dumping duties on milled rice and other U.S. commodities as a very serious matter,” he said.

According to Satterfield, U.S. rice farmers exported 730,000 metric tons of rice to Mexico in 2002. This number, he says, reflects substantial improvements from the period of the early 1990s when the United States was only exporting 146,000 metric tons of the commodity.

“U.S. rice accounts for 92 percent of Mexico's rice imports, and almost one-half of all rice consumed by their population is purchased from the United States,” he says. “Since the per capita rice consumption in Mexico is extremely low, the U.S. rice industry anticipates that consumption will grow in Mexico as import duties on rice from the United States have ended.

The anti-dumping penalties against the U.S. rice industry came at a conspicuous time, he notes, since import tariffs on milled rice were lifted Jan. 1, 2003 in concert with the terms of NAFTA.

Not backing down

While rice growers are thankful that the Senate Committee on Finance is placing an emphasis on the importance of trade relations between the United States agriculture industry and Mexico, Satterfield says the rice industry is not backing down from its demands that Mexico cease its anti-dumping duty.

He says the consequences of the anti-dumping penalties against U.S. milled rice are already registering problems, with a 34 percent decline in exports of U.S. milled rice during the first three months of 2003, as compared to 2002.

“As farmers, and as a rice industry, we enjoy trade relations with Mexico which have resulted in Mexico becoming our primary rice customer. However, in response to the anti-dumping duty, which has been imposed on U.S. milled rice, our industry will continue legal action in the form of an appeal within Mexico, and we support a filing by the U.S. government for a dispute settlement case in the World Trade Organization.

Since NAFTA agreements and obligations lifted import duties on all rice from the United States on Jan. 1, 2003, there has been great anticipation that the Mexican rice market would grow even more in years to come, Satterfield said.

“However, almost simultaneous with the duties on U.S. rice being ended earlier this year, the Mexican Ministry of the Economy has imposed an anti-dumping duty on U.S. milled rice which we believe to be counter to any trade policies which have previously been agreed to between the two countries.”

Imposed duty

The Mexican Ministry of the Economy imposed an anti-dumping duty of 10.18 percent on imports of long-grain white rice and other rice mixtures in January of 2003, only weeks after import duties on all rice from the United States to Mexico were lifted under the terms of NAFTA.

Although the anti-dumping action is restricted to milled rice only, as a component of total U.S. rice exports, the U.S. rice industry has expressed a concern that a pattern may be developing which would suggest that North American Free Trade Agreement partners might not choose to enforce the principles and obligations under the previously-ratified treaty.

The U.S. rice industry, according to Satterfield's testimony, will continue legal action in the form of appeals to the Mexican Ministry of Economics. Also, Satterfield urged Congress and the administration to take the steps toward filing a dispute settlement case with Mexico in the WTO.

“Agricultural trade, and especially the U.S. rice export trade with Mexico is vitally important to the U.S. rice farmer and the entire industry, but if we allow Mexico's recent actions to impose punitive anti-dumping duties on long-grain milled rice from the United States go unchallenged, this action could undermine the integrity of the WTO agreement and create uncertainty throughout U.S. agriculture as it pertains to future trade agreements,” he noted.

e-mail: flaws@primediabusiness.com