Pet News

Ensuring Equitable Trade: NARA's Stand for USMCA Integrity

NARA's Urgent Appeal to U.S. Trade Regulators

On December 3, the North American Renderers Association (NARA) presented its case to the U.S. International Trade Commission. The core of their argument focused on the detrimental impact of Mexico's value-added tax (VAT) on American-sourced feed components, urging the U.S. government to intervene and rectify this trade impediment. NARA's consistent engagement with both the United States Department of Agriculture (USDA) and the Office of the U.S. Trade Representative (USTR) underscores the gravity of this issue, which places U.S. rendering operations and their associated industries at a distinct competitive disadvantage.

The USMCA Review: A Platform for Addressing Trade Discrepancies

This pivotal testimony was delivered during the routine six-year assessment of the United States–Mexico–Canada Agreement (USMCA), held in Washington, D.C. The public forum allowed various stakeholders to articulate their implementation concerns regarding the trade pact. Dana Johnson Downing, NARA's senior vice president overseeing international programs, eloquently articulated NARA's position to key U.S. trade officials, emphasizing the need for robust enforcement of the agreement's principles.

Upholding the Spirit of Free Trade: A Non-Negotiable Imperative

Johnson Downing stressed in her address that the USMCA serves as a fundamental pillar for North American agriculture. She highlighted that the full benefits of this agreement can only be realized if every participating nation adheres faithfully to its commitments, both in letter and spirit. For the animal products industry, she asserted, diligent enforcement is not merely an option but an absolute necessity for its sustained viability and fair operation within the North American market.

Mexico's VAT: A Barrier to Fair Competition

NARA contends that Mexico's ongoing imposition of a 16% VAT on imported animal protein meals and other feed ingredients from the U.S. directly contravenes the USMCA's provisions for market access. These provisions explicitly guarantee duty-free entry for such products. Compounding the issue, similar animal protein meals produced domestically in Mexico are exempt from this tax. This disparity raises significant concerns under USMCA Chapter 2 regarding national treatment and runs contrary to obligations outlined in Article III of the General Agreement on Tariffs and Trade (GATT). NARA interprets this VAT as an indirect tariff, effectively dismantling the equitable trading environment that the USMCA was designed to establish.

The Economic Impact: Threatening Competitiveness and Customer Welfare

Johnson Downing reiterated that this tax operates as a de facto tariff, eroding the fundamental spirit and explicit stipulations of the USMCA. She warned that it imperils the competitive standing of American exports and inflicts direct financial harm upon Mexican clients, many of whom operate with narrow profit margins and are ill-equipped to absorb these additional expenses. The cumulative effect of this tax jeopardizes the economic stability of businesses on both sides of the border.

Advocacy Efforts for Resolving the VAT Dispute

In response to this pressing challenge, Kent Swisher, NARA's president and CEO, along with Johnson Downing, engaged in discussions with leadership at the USDA, USTR, and on Capitol Hill. These meetings aimed to underscore the critical urgency of resolving the VAT issue. They strongly advocated for prioritizing this matter during ongoing U.S.–Mexico negotiations within the comprehensive framework of the USMCA, seeking a resolution that restores fair and balanced trade practice

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