November 29, 2004

 

 

Mexico Announces Soymeal Tariff Rate Quota

 

Mexico's Secretariat of Economy published on Nov. 22, in the Diario Oficial (Mexico's Federal Register), an announcement creating an import tariff-rate-quota for soybean meal. The objective of this measure is to open soybean meal up to competition from other non-North American Free Trade Association countries, according to an attache report posted Friday on the U.S. Department of Agriculture's Foreign Agricultural Services Web site.

 

Introduction: This report summarizes an announcement on a soybean meal TRQ published in Mexico's "Diario Oficial" (Federal Register) on November 22, 2004.

 

Disclaimer: This summary is based on a cursory review of the subject announcement and therefore should not, under any circumstances, be viewed as a definitive reading of the regulation in question, or of its implications for U.S. agricultural export trade interests. In the event of a discrepancy or discrepancies between this summary and the complete regulation or announcement as published in Spanish, the latter shall prevail.

 

FAS/Mexico's Executive Summary: The Secretariat of Economy (SE) published on November 22, 2004, in the Diario Oficial (Federal Register), a decree that creates a tariff rate quota (TRQ) for soybean meal (H.T. 2304.00.01) from all countries (including the United States) with a zero import duty. According to the announcement, there may be a need to import additional soybean meal (SBM) from other countries and the Government of Mexico (GOM) would like to maximize SBM buying opportunities for its livestock industry by giving them alternative sourcing options. The announcement also states that Mexico's Commission of Foreign Trade, whose mission is to discuss trade measures and whose membership is comprised of several Mexican ministries as well as the private sector, has ruled favorably on this decision.

 

This announcement does not include the details on the volume, time period in which the TRQ is effective, nor the administrative procedures on allocation. According to SE officials, they have not yet made a decision about publishing these details and procedures in 2004, as U.S. soybean prices have moderated in recent months. This announcement is considered the first step in the TRQ announcement. The second step, establishing the mechanism for the importation of SBM from third countries is pending at SE.

 

FAS Analysis:

 

Mexico is opening its market in response to past tight U.S. supplies and high prices. During the first half of 2004, U.S. SBM and soybean prices increased considerably - a situation of great concern to the Mexican livestock industry, which subsequently petitioned the GOM to create a TRQ for SBM from all countries so as to maintain its competitiveness.

 

In particular, this TRQ would allow SBM from Brazil and Argentina to enter with a zero duty, rather than the respective 18 percent and 14.4 percent duty the two countries currently have.

 

The GOM's creation of such a TRQ is not a violation of NAFTA. Over the last few years, Mexico has also created TRQs to non-NAFTA countries for dry beans and poultry products. SE officials have consistently maintained that the reason for this TRQ is to provide the best SBM prices to its livestock industry so that it may remain competitive. Although the GOM realizes that MY 2003/04 was an anomaly in terms of U.S. soybean production, it is implementing the first stage of this TRQ so that it may have a mechanism in place in the event that there are tight U.S. supplies and high prices in the future. It should be reemphasized that a second announcement outlining the details on TRQ volume, time period, and administrative allocation procedures, is necessary before SBM can be imported from other, non-NAFTA, countries, under this TRQ.

 

Source: USDA