November 17, 2003



Brazil Largest Beef Exporter Bertin's Expansion Affected By US Restriction on Beef Imports


With 3,500 workers slaughtering and processing a capacity of 1,100 cows per day in Brazil, it might appear the owners of the Bertin plant have all the work they can handle.


However the company still strives for expansion, but is cramped by import restrictions that keep raw Brazilian beef out of U.S. grocery stores and restaurants. "We are exporting our beef to all other major markets in the world," said Bertin sales manager Dominic MacDermot. "Why is it that we are being penalized by the Americans?"


Bertin is just one of many companies that are helping to turn Brazil into a competitive agricultural giant, and that supports its role as a leader in the push for better global trade terms for developing countries.


Key talks on forming a 34-nation Free Trade Area of the Americas will be held in Miami this week, but might go nowhere because of differences over trade rules on grain, fruit, beef and other farm products. Other nations want the United States to reduce or eliminate subsidies, quotas, tariffs and other barriers that protect American farmers.


Disputes over agriculture were key to the collapse of a round of world trade talks in Mexico in September. Brazil was Latin America's leader in a group of poorer nations that opposed the U.S. and European positions in that meeting.


U.S. officials want agricultural issues for the Free Trade Area of the Americas decided by the World Trade Organization and its 146 member nations. But Brazil, which will be co-chairman with the United States at this week's talks, doesn't want to wait for a World Trade Organization solution and is threatening to take off the bargaining table issues such as investment and intellectual property rights - both high priorities for American companies.


For Brazil and other developing countries, it makes no sense to create the world's largest free-trade zone and open their markets to rich developed countries like the United States unless they can get access for their own booming agricultural exports. "If you can't point to success on the agricultural front, Brazilians are going to say,  'What kind of globalization is this?'" said Stephen Haber, a Latin American expert at the Hoover Institution at Stanford University.


Bertin, the country's biggest beef exporter, slaughters 1.2 million cattle a year in Lins and three other plants spread across vast, fertile savannas. It ships meat to Europe, the Middle East and Asia.


Bertin manufactures $40 million of corned beef and other cooked beef products for shipment to the United States annually. Bertin products appear on supermarket shelves under the Hormel, Libby and Hereford brands.


But while American meat sanitary rules permit the cooked beef exports, U.S. regulators haven't approved Brazil's moves toward ensuring its raw beef is fit for consumption.


Brazilians say the U.S. position is an unfair trade barrier, pointing out that Europe has been importing Brazilian beef for years. After Chile, Bertin's top raw beef export destinations are Germany, England, Italy and the Netherlands.


Brazil produces 13% of the world's beef - sending $1.4 billion in annual exports to 80 countries. The country has the largest commercial cattle herd in the world, and slaughters 33 million head yearly.


Even if the United States buckles and agrees that Brazilian beef is safe for U.S. consumers, the country's beef processors would face another hurdle: Import quotas that restrict the amount of beef foreign countries can send to the United States.


For many Brazilians, quotas are further roadblocks to the Free Trade Area of the Americas negotiations unless the quotas are lifted. "Agriculture is the linchpin of the package," said Jeff Schott, an economist with the Institute for International Economics in Washington. "If the U.S. and Brazil are going to narrow their differences, there have to be agreements on specific issues that are beneficial to both sides."

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