ST. LOUIS, Mo. — Guatemala will drop some tariffs on bone-in U.S. chicken leg quarters – a boon in one of the fastest-growing export markets for U.S. poultry.

 

Guatemala’s decision, announced April 3 by the Office of the U.S. Trade Representative, indicates U.S. exporters this year will not have to pay a 12.5 percent tariff on bone-in chicken leg quarters. Guatemala importers and U.S. exporters welcomed the announcement.

 

“We are most pleased to see this increased level access for bone-in chicken leg meat to Guatemala, which has been one of our fastest growing export markets,” said Jim Sumner, president of USA Poultry & Egg Export Council (USAPEEC).

 

The announcement may signal the resolution of a complicated dispute between Guatemalan importers and government agencies around the way frozen chicken leg quarters are coded, since Guatemala entered into the Central America Free Trade Agreement (CAFTA-DR).

 

Certain import codes, which could include frozen chicken leg quarters, were mistakenly published in Guatemala as eligible for tariff reductions under CAFTA-DR. These import codes were originally intended to be used only for regional trade among Central American countries, not chicken leg quarters from the United States, according to a December 2016 USDA report.

 

But Guatemalan importers discovered the error and began using the codes to classify frozen chicken leg quarters under those product line codes for which tariffs were phasing out under CAFTADR. By Jan. 1, 2015, the import duty of those tariff codes reached zero, “which was the year Guatemala exported a record volume of chicken leg quarters outside the CAFTA-DR quota,” according to the USDA.

 

The volume increase prompted action from Guatemala’s customs duty and tax collection agency. The disputed codes were removed from Guatemala’s posted tariff schedule in February 2016, meaning they would no longer be eligible for the zero tariff.

 

Guatemalan importers filed suit against the government customs agencies, and a Guatemalan court ruled last June that the customs agencies had overstepped their authority, since the Harmonized Tariff System could only be changed by Guatemala’s Congress each year.

 

That meant importers could, and did, immediately start importing U.S. frozen chicken leg quarters with no import tariffs. It helped Guatemala be the sixth-largest export market for U.S. poultry meat, valued about $82 million in 2016, according to USAPEEC.

 

More than 60 percent of U.S. poultry meat exports to Guatemala are chicken leg quarters, according to U.S. trade data. The agreement will allow Guatemalan importers to continue importing frozen chicken leg quarters from the U.S. without incurring the 12.5 percent tariff.

 

“Under the agreement, Guatemala will unilaterally accelerate the elimination of tariffs on U.S. exports of fresh, frozen and chilled chicken leg quarters. Without this agreement, U.S. poultry exports would have faced a tariff of 12.5 percent this year. This notable achievement for U.S. poultry exporters is a result of negotiations that USTR commenced in February 2017,” stated USAPEEC.

 

Exports of U.S. poultry to Guatemala continue to rise this year. Chicken leg quarter exports there for January and February increased to about 2,400 metric tons – a value increase of about $2.5 million over last year – for the two months. Meat and dairy products from the United States have posted large gains among farm and food exports to Guatemala in the last decade. The value of pork, beef and dairy products has increased from $31.5 million in 2007 to more than $110 million in 2016.

 

Soybean meal exports posted a $60 million increase during that period, and corn increased $50 million. Cotton and rice exports also increased, helping boost the value of total U.S. agricultural exports to the nation from $685 million to $1.1 billion, between 2007 and 2016. The CAFTA agreement took effect in 2006 among the U.S., El Salvador, Guatemala and Honduras. Dominican Republic and Nicaragua entered it in 2007 and Costa Rica, in 2008.