Mexico's imposition of increased duties on imports of long grain milled rice from the United States has drawn sharp criticism from the U.S. rice industry, whose exports now join the list of U.S. agricultural commodities disadvantaged by Mexico's use of its anti-dumping laws.
While Mexico is one of the top customers for U.S. rice, only a very small percentage of the rice it imports from the United States is in milled form. The USA Rice Federation's (USA Rice) producer and miller members mounted an aggressive defense against Mexico's suit, alleging dumping when first initiated in 2000.
On July 18, 2001, the Mexican government issued a preliminary determination favorable to the United States in the anti-dumping investigation against imports of long grain milled rice from the United States.
However, Mexico's Ministry of the Economy announced recently the immediate imposition of anti-dumping duties of up to 10.18 percent on U.S. long grain milled rice — an action that provoked outrage throughout the U.S. rice industry.
“This action is, frankly, ridiculous, and without merit,” said David E. Van Oss, chairman of the USA Rice Federation, which represents producers, millers and allied industries. “When Mexico issued its preliminary decision on the anti-dumping investigation last summer, there was no finding of injury by imports from the United States and no anti-dumping duties were imposed.
“Now, less than a year later, the tables are completely turned. The only conclusion to draw is that this (latest) decision was a political decision.”
Anti-dumping duties are designed to offset alleged “dumping,” or selling a product in a foreign market for less than the price charged in the domestic market. Three USA Rice members underwent an extensive and grueling investigation by Mexican auditors to determine the extent of alleged dumping. Two of these firms came up with a dumping rate of zero, while the third had a rate of slightly under 4 percent.
In an unprecedented action, Mexico assigned an “all other” anti-dumping duty of 10.18 percent on all other suppliers of U.S. long grain milled rice (excluding parboiled), even if these suppliers have never sold rice to Mexico.
“There is no rhyme or reason to this action, and it is incomprehensible how the Mexican government can justify a 10.18 percent duty for exporters who may have never shipped rice to Mexico,” said Jimmy Hoppe, a Louisiana rice producer who chairs the USA Rice Council.
Although U.S. long grain milled rice exports by volume now comprise approximately 1.5 percent of Mexico's total rice consumption, many believe the size of U.S. long grain shipments were poised to grow significantly.
Under the terms of the North American Free Trade Agreement, duties on all U.S. rice imported by Mexico were to go to zero percent in 2003, approximately six months from the date of the anti-dumping announcement. The overwhelming majority of U.S. rice exported to Mexico is in rough, or paddy, form.
If Mexico claims injury from the small percentage of U.S. long grain milled rice entering the country, fears are rising the entire market may ultimately be threatened.
To date, the defense against Mexico's allegations of dumping has cost USA Rice and its members more than $500,000 in legal fees.
“The story is all too familiar in Mexico — U.S. apples, high fructose corn syrup, beef and now rice face new trade barriers in the guise of protection against dumping. It's time for the U.S. government to counter Mexico's anti-free trade actions,” said Don Haywood, chairman of the Rice Millers' Association.
“We are very disappointed by the actions of Mexico, which threaten to circumvent the free-trade promise of NAFTA. The U.S. rice industry will continue our fight to meet the demand of Mexico's consumers for U.S. rice,” said Haywood.
Arkansas rice producer Byron Holmes, who serves on the USA Rice Council's board of directors, summed up farmer frustration over trade barriers that shoot down critically needed rice export markets.
“Every time the rice industry turns around we're caught in some country's crosshairs,” Holmes said. “Whether it's the EU's plans to protest U.S. action on steel imports by targeting U.S. rice in the European market or Japan's practices that keep U.S. rice away from Japanese consumers, U.S. rice producers and exporters need our government's help in countering these road blocks.”
USA Rice is a federation of U.S. rice producers, millers and allied industries working together to address common challenges, advocate collective interests, and create opportunities to strengthen the long-term economic viability of the U. S. rice industry. USA Rice members are active in all rice-producing states: Arkansas, California, Florida, Louisiana, Mississippi, Missouri, and Texas. The U.S. Rice Producers' Group,
Rice Millers' Association and USA Rice Council are charter members of USA Rice.