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Voluntary Report - public distribution

**Date:** 2/14/2003

**GAIN Report Number:** MX3022

**Mexico**

**Agricultural Situation**

**Weekly Highlights & Hot Bites Issue #8**

**NAFTA Update Edition**

**2003**

**Approved by:**

William L. Brant

![](media/image1.wmf)U.S. Embassy Mexico City

#### 

**Prepared by:**

Jorge Sánchez

**Report Highlights:**

PREFERRED BY U.S. CONSUMERS AND MARKET SHARE GAINED\*CITRIC AND TROPICAL
FRUIT WINNERS\*BELL PEPPERS AND BROCCOLI: NAFTA CHAMPIONS\*CANTALOUPE
AND WATERMELON ARE A SUCCESS\*UNAM RESEARCH GIVES GMOS THUMBS UP\*SALES
INCREASE FOR WAL-MART MEXICO\*"SAFEGUARDS WILL OPEN NAFTA RENEGOTIATION
TALKS"\*NAFTA PROTECTS U.S. FROM CHINESE EXPORTS\*ACCESS TO MEXICAN
AVOCADOS\* CANADA REJECTS NAFTA RENEGOTIATION\*"THE BEST MEXICO HAS EVER
HAD"\*RENEGOTIATION OF DATES\*COMMON AGRICULTURAL POLICIES\*FOR OLD
TIMES SAKE "LET'S RENEGOTIATE NAFTA"\*MEXICO FILES WTO CLAIM AGAINST THE
UNITED STATES\*NEW SOCIAL PACT\*"NAFTA RENEGOTIATIONS, NOT A SMART
IDEA"\*OECD NOTES DIFFERENCES\*SENASICA FEARS NEW FDA FOOD CONTROL
MEASURES

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Mexico \[MX\]

\[MX\]

Welcome to Hot Bites from Mexico, a weekly review of issues of interest
to the U.S. agricultural community. The topics covered in this report
reflect developments in Mexico that have been garnered during travel
around the country, reported in the media, or offered by host country
officials and agricultural analysts. Readers should understand that
press articles are included in this report to provide insights into the
Mexican \"mood\" facing U.S. agricultural exporters. Significant issues
will be expanded upon in subsequent reports from this office.

DISCLAIMER: Any press summary contained herein does NOT reflect USDA's,
the U.S. Embassy's, or any other U.S. Government agency's point of view
or official policy.

# 

**PREFERRED BY U.S. CONSUMERS AND MARKET SHARE GAIN**

On February 13, 2003, Adalberto Gonzalez, Director General of the Trade
and Surplus for the Secretariat of the Economy, said that Mexico had
become the primary supplier of over 162 agricultural products to the
U.S. as a direct result of NAFTA. Mr. Gonzalez added that from January
to November 2002 exports totaled \$4,022 million. (Source: *Reforma*,
2/14/03)

**CITRIC AND TROPICAL FRUIT WINNERS**

Mexican mangos and limes have been one of NAFTA's success stories. 
According to the USDA, Mexican lime exports increased by 276 percent
since 1994.  Mexican mango production has also grown by 26 percent since
1994. (Source: *Reforma*, 2/13/03)

# BELL PEPPERS AND BROCCOLI: NAFTA CHAMPIONS

Mexican exports of bell peppers and broccoli have gained ground in
international markets and are among NAFTA's strongest agricultural
success stories.  However, Mexican farmers still have to monitor
exchange rates, tax burdens, and supply and demand cycles to remain
competitive. (Source: *Reforma*, 2/10/03)

**CANTALOUPE AND WATERMELON ARE A SUCCESS**

Mexican cantaloupe and watermelon producers have also been among NAFTA's
strongest agricultural success stories.  Twenty-seven percent of U.S.
cantaloupe imports come from Mexico, and Mexican watermelon production
grew by 97 percent between 1994 and 2002, in part due to increased
exports. (Source: *Reforma*, 2/12/03)

**UNAM RESEARCH GIVES GMOS THUMBS UP**

On February 12, 2003, Agustin Lopez Munguia, a renowned researcher for
the National Autonomous University of Mexico (UNAM) said that his
research and studies have demonstrated that GMOs are apt for human
consumption. He added, that "they have the promising potential to
develop hypo-allergenic wheat and rice containing vitamin A that can
reduce blindness." (Source: *La Jornada*, 2/12/03)

## SALES INCREASE FOR WAL-MART MEXICO

Wal-Mart's January 2003 sales reached 9.334 billion pesos (USD \$867
million), a 10.1 increase over sales for the same month in 2002. Banamex
Citigroup analysts foresee a 9 percent increase in total sales for the
fourth trimester of 2002. This growth reflects a slowdown as compared to
the uninterrupted double-digit growth experienced during the last four
years. To date, Wal-Mart Mexico operates 597 stores; 50 Sam's Clubs, 118
*bodegas* (wholesale stores), 75 super centers, 44 *Superamas*, 50
*Suburbia* department stores, and 260 restaurants, including 16
franchises. (Source: *El Financiero*, 2/10/03)

**"SAFEGUARDS WILL OPEN NAFTA RENEGOTIATION TALKS"**

According to Miguel Alemán, the Governor of the State of Veracruz, the
use of safeguards would likely encourage renegotiating NAFTA's
agricultural chapter. Governor Alemán added that safeguards would
pressure the annulment or renegotiation of NAFTA's agricultural chapter
because the U.S. and Canada stand to lose more by not renegotiating.
(Source: *El Financiero*, 2/12/03)

**NAFTA PROTECTS U.S. FROM CHINESE EXPORTS**

On February 12, 2003, former Secretary of the Economy, Jaime Serra
Puche, said that NAFTA had protected the Mexican export market from the
overwhelming impact of Chinese exports to the United States. (Source:
*El Financiero*, 2/13/03)

**ACCESS TO MEXICAN AVOCADOS**

On January 11, 2003, Javier Trujillo, Director of the Mexican
Phytosanitary Service (SENASICA), said that the USDA had delayed
releasing an agreement permitting the access of Mexican avocados to the
U.S. market in all 50 states.  This delay could be interpreted as a type
of "vindictive" action against the GOM's decision to close its borders
to U.S. bean imports. (Source: *El Financiero*, 2/12/03)

### CANADA REJECTS NAFTA RENEGOTIATION

On February 10, 2003, Keith Christie, Canada's Ambassador to Mexico,
categorically rejected the idea of renegotiating NAFTA, saying it was an
entire package of agreements.  Mexican Senator Jose Bonilla said that
U.S. senators from the Senate Agricultural Commission were willing to
renegotiate NAFTA's agricultural chapters, and they would discuss this
issue at the binational parliamentary session in June. (Comment: The
U.S. Senate Committee on Agriculture, Nutrition and Forestry press
office, denied making claims to renegotiate NAFTA's agricultural
chapter.) (Source: *Reforma, El Universal*, 2/13/03) 

**"THE BEST MEXICO HAS EVER HAD"**

On February 12, 2003, President Fox publicly praised Agriculture
Secretary, Javier Usabiaga, as "the best that Mexico has ever had," one
day after the opening of a public dialogue session between the federal
government and farming groups. (Source: *Reforma, El Universal, La
Jornada*, 2/13/03)

**RENEGOTIATION OF DATES**

On February 11, 2003, the Permanent Agrarian Council (CAP), the National
Farm Workers Confederation (CNC), El Barzón and "The Farmland Can't
Stand Anymore" agreed to join the federal government's dialogue on
agricultural policies, only after the government agreed to new
conditions regarding the site and dates of the negotiations, which will
now be prolonged by three days in March. The groups met individually
with Secretary of Agriculture, Javier Usabiaga, and Secretary of
Government Affairs, Santiago Creel, at the latter's office as the second
day of the National Agricultural Discussions were taking place. (Source:
*Reforma, El Universal, El Financiero*, 2/12/03)

**COMMON AGRICULTURAL POLICIES**

On February 11, 2003, the Mexican Congress discussed meeting with U.S.
and Canadian members of congress to discuss the renegotiation of NAFTA's
agricultural chapter and to create common agricultural policies for the
three member countries. These meeting would take place in March 2003.
(Source: *El Financiero*, 2/12/03)

**FOR OLD TIMES SAKE "LET'S RENEGOTIATE NAFTA"**

On February 12, 2003, during the third day of a national dialogue on
agricultural policies, the Permanent Agrarian Council (CAP) and "The
Farmland Can't Stand Anymore" presented a formal demand that NAFTA be
renegotiated. The Secretariat of Government Affairs announced that it
would set up a separate side table of discussions to attend to the
immediate needs of farmers aside from those of the main farming groups.
(Source: *Reforma, El Universal, El Financiero*, 2/13/03)

**MEXICO FILES WTO CLAIM AGAINST THE UNITED STATES**

On February 10, 2003, Mexico filed a complaint to the World Trade
Organization (WTO) against the United States regarding the antidumping
measures. According to a new report released by the Institute for
Agriculture and Trade Policy (IATP), five primary farm commodities are
being dumped onto international global markets by the United States in
violation of WTO agriculture rules. IATP researchers, Sophia Murphy and
Mary Beth Lake, looked at the cost of production of corn, soybeans,
cotton, wheat and rice, and compared the costs. In all cases, the
commodities were sold below the cost of production, a practice known as
export dumping. Moreover, the document details how the dumping begins
right here at home, at the farm gate, where farmers are selling their
crops for prices up to 40 percent below their cost of production. \"The
dumping of commodities on international markets hurts farmers all over
the world, including U.S. farmers, by driving down the marketplace
price,\" said Mark Ritchie, IATP President. Levels of dumping hover
around 40 percent for wheat, between 25 percent and 30 percent for corn
(maize) and levels have risen steadily over the past four years for
soybeans, to nearly 30 percent. These percentages mean that wheat, for
example, is selling for 40 percent less than it costs to produce. For
cotton, the level of dumping for 2001 rose to a remarkable 57 percent,
and for rice it has stabilized at around 20 percent. (Source: *La
Jornada, El Financiero*, 2/12/03)

**NEW SOCIAL PACT**

On February 13, 2003, the Secretariat of Social Development (SEDESOL),
announced that they were ready to start a new social pact. At the
national agriculture discussion rounds, Josefina Vazquez Mote, Secretary
of the Social Development, said that she would set a crusade to
establish better public relations. (Source: *El Universal*, 2/14/03)

**"NAFTA RENEGOTIATIONS, NOT A SMART IDEA"**

On February 13, 2003, Institutional Revolutionary Party (PRI)
affiliate-group of the National Agricultural Council (CAN), proposed
what they called a viable option to renegotiating NAFTA's agricultural
chapter. In their proposal, "The Trilateral Agricultural Policy," they
seek to unite the concerns of the all NAFTA member countries in hopes of
modifying market asymmetries and promote greater agricultural
development. (Source: *El Universal*, 2/14/03)

**OECD NOTES DIFFERENCES**

A study conducted by the Organization for Economic Cooperation and
Development (OECD) the National Statistics Institute of Mexico (INEGI)
concluded that the United States gives \$117 per acre in subsidies to
producers, in Mexico it is only \$30 per acre. The report also noted
that Mexican producers only received \$81 per capita for farm support,
while the U.S. producers received \$346. (Source: *El Financiero*,
2/14/03)

**SENASICA FEARS NEW FDA FOOD CONTROL MEASURES**

On February 13, 2003, Javier Trujillo Arriago, Director of the Mexican
Phytosanitary Service (SENASICA), stated that "the application of
onerous sanitary measures by the United States threatens to hurt Mexican
horticulture exports to the United States." Mr. Trujillo added that
tomatoes, mango and grapefruit are among the commodities that will
receive the highest scrutiny by the Food and Drug Administration (FDA).
(Source: *Reforma*, 2/14/03)

**REPORTS SUBMITTED RECENTLY BY FAS/MEXICO CITY**

+-------------+--------------------------------------------+----------+
| ##          | ###### Title                               | **Date** |
| #### Number |                                            |          |
+-------------+--------------------------------------------+----------+
| MX3021      | Hot Bites Issue #7                         | 02/11/03 |
+-------------+--------------------------------------------+----------+

# 

We are available at **http://www.atomexico.gob.mx** or visit our
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selection of FAS\' worldwide agricultural reporting.

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**[AgMexico@fas.usda.gov]{.underline} and/or
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