According to The Poultry Site, Mexico is getting set to impose tariffs on U.S. chicken legs with the final decision on the tariffs to be made by August. Here is a selection from the story:
Early in 2011, three Mexican poultry companies petitioned the Mexican government to begin an anti-dumping investigation of imports of chicken leg quarters from the United States, frivolously claiming that U.S. companies were exporting leg quarters to Mexico at below-market prices.
The Mexican ministry recently announced its preliminary results; with proposed duties on U.S. poultry ranging from 64 per cent to 129 per cent. Although these duties have not yet been applied, under Mexican law, a final decision will have to be reached by August.
This action is based on the "average cost of production" and assumes that every part of the chicken should be priced the same, e.g., that the chicken feet have the same value as the chicken breast.
Mexico is copying China's tactics for growing its economy at U.S. expense through trade surpluses. Referring to China's ludicrous claim that the U.S. is dumping chicken feet on the Chinese market at a price lower than they are sold in the United States, The Poultry Site continues:
With U.S. poultry exports to China significantly decreased due to frivolous anti-dumping duties, Mexico is the United States' most important market, importing nearly 250,000 metric tons in the most recent year valued at nearly $270 million.
Like China, Mexico manipulates the exchange rate between its currency and the dollar, enabling it to run a $58 billion trade surplus with the United States in 2011. In his November 2010 speech, Federal Reserve Chairman Ben Bernanke reported (see Figure 8) that between September 2009 and September 2010, Mexico devoted 3.64% of its GDP to currency reserve accumulations. These accumulations artificially weaken the Mexican peso and artificially strengthen the dollar so that Mexican products are artificially low priced and American products are artificially high priced. Almost all of the emerging market governments are copying China's growth strategy.
Free trade agreements are not worth the paper that they are written upon unless they include balanced trade clauses that allow any country running both an overall trade deficit and a bilateral trade deficit to impose an across-the-board trade-balancing tariff upon the other's goods. Balanced trade benefits both parties. Phony free trade gives jobs to the trade surplus country and debt to the trade deficit country.
And just why is the Obama administration letting China (which ran a $282 billion trade surplus with the U.S. in 2011) keep out U.S. chicken products? WTO rules let trade deficit countries impose trade balancing tariffs, such as a scaled tariff whose import surcharge is set so as to take in half of our bilateral trade deficit as tariff revenue.
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