Voluntary Report - public distribution

**Date:** 6/8/2004

**GAIN Report Number:** MX4071

MX4071

**Mexico**

**Agricultural Situation**

**Weekly Highlights & Hot Bites, Issue #22**

**2004**

**Approved by:**

![](media/image1.wmf)William L. Brant

U.S. Embassy

**Prepared by:**

Benjamin Juarez, Salvador Trejo and Gabriel Hernandez

**Report Highlights:**

\*USABIAGA PROPOSES TO REDUCE MEXICO\'S CORN PRODUCTION

\*MEXICO UPHOLDS ITS PREVIOUS DECISION TO ELIMINATE COMPENSATORY DUTY ON
IMPORTS OF LIVE HOGS FOR SLAUGHTER

\*MEXICO PUBLISHES PRELIMINARY RESOLUTION ON ANTIDUMPING INVESTIGATION
OF U.S. PORK MEAT

\*MEXICO INITIATES DUMPING INVESTIGATION OF U.S. PORK LEGS

\*MEXICO\'S SECRETARIAT OF ECONOMY RECOMMENDS REORIENTATION OF EXPORTS

\*MEXICO SHOWS HIGH TRANSPORTATION COSTS FOR CORN

\*CERTIFIED MEXICAN PRODUCTS

\*NOSTALGIA OF MEXICANS IN THE US OPENS A MARKET WORTH 12 BILLION

\*US SUPREME COURT DECISION UNCLEAR TO MEXICAN TRUCKERS

\*REPORT FINDS MEXICO THE NET LOSER IN NAFTA

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Mexico \[MX1\]

\[MX\]

# 

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.

# 

# USABIAGA PROPOSES TO REDUCE MEXICO\'S CORN PRODUCTION 

Secretary of Agriculture Javier Usabiaga urged the reduction of corn
production because of the imminent market opening foreseen in the North
America Free Trade Agreement. He said, \"Only efficient farmers will be
able to compete\" against imported grains from the United States and
Canada." He called for the commencement of change of cultivation toward
other more profitable crops, \"Where Mexico is more efficient than the
United States,\" such as oilseeds (i.e. safflower or canola) or forage
and even soybeans. (Source: *El Financiero*, 6/7/04)

MEXICO UPHOLDS ITS PREVIOUS DECISION TO ELIMINATE COMPENSATORY DUTY ON
IMPORTS OF LIVE HOGS FOR SLAUGHTER

On May 25, 2004, Mexico published its final Resolution on the appeal for
reinstatement of compensatory duties on imports of live hogs for
slaughter originating from the United States. The decision upholds the
decision taken on May 23, 2003, to eliminate the US\$0.351 per kilogram
compensatory duty, reducing the tariffs on imports of live hogs for
slaughter to zero. (Source: *Diario Oficial*, 5/25/04)

**MEXICO PUBLISHES PRELIMINARY RESOLUTION ON ANTIDUMPING INVESTIGATION
OF U.S. PORK MEAT**

The Mexican government has officially announced the preliminary
resolution on the investigation on dumping charges filed by the Mexican
Pork Council (CMP) against importers and exporters of U.S. pork meat
classified in tariff codes 0203.11.01, 0203.12.01, 0203.19.99,
0203.21.01, 0203.22.01 and 0203.29.99. The Secretariat of Economy
concluded that although no price discrimination margins were found for
the period investigated, it was not possible to quantify objectively the
damage or threat of damage to the domestic industry alleged by the
petitioner. Therefore, the investigative procedure for determining price
discrimination is concluded and no compensatory duties are applicable.
(Source: *Diario Oficial*, 5/25/04)

**MEXICO INITIATES DUMPING INVESTIGATION OF U.S. PORK LEGS**

The Secretariat of Economy (SE) announced on May 31, 2004, in Mexico's
*Diario Oficial* (Federal Register), the initiation of an official
antidumping investigation against U.S. pork legs. The investigation is
in response to a petition submitted by the Mexican Council of Pork
Breeders, and several Mexican slaughterhouses and packing plants (TIF).
The official announcement did not include the immediate imposition of
countervailing duties. At issue is U.S. production and market prices for
pork legs. Exporters, importers and other interested parties have
twenty-eight (28) working days from the publication date of this
official announcement to respond to questionnaires from SE. (Source:
*Diario Oficial*, 5/25/04)

**MEXICO'S SECRETARIAT OF ECONOMY RECOMMENDS REORIENTATION OF EXPORTS**

According to a local newspaper, after making a study of the principal
100 products that Mexico exports to the United States, the Secretariat
of Economy (SE) recommended that Mexican companies reorient their
exports to compete with Chinese products in the U.S. market. Eduardo
Solis, head of the Promotions and Investment Unit at SE, suggested that
Mexican companies concentrate on their strength in the production of
articles of greater size, or made to order items such as refrigerators,
and the United States taking advantage of the geographical closeness
between Mexico. (Source: *Reforma,* 6/8/04)

# MEXICO SHOWS HIGH TRANSPORTATION COSTS FOR CORN 

Contrary to popular belief, the cost to transport corn from the United
States to Mexico is 10 percent cheaper than to move it from Sinaloa to
Mexico City. Industry experts concluded that Mexican transport lacks
infrastructure compared with the United States, which increases
transportation costs by 10 percent to cover maintenance expenses.
Industry sources pointed out that transportation costs hurt the movement
of domestic corn, since to move corn from Nebraska, Iowa and Illinois to
Mexico City costs US\$30 per ton, while from Sinaloa to Mexico City cost
is US\$33 per ton. (Source: *Reforma*, 6/7/04)

# CERTIFIED MEXICAN PRODUCTS 

"From a total of 40 Mexican fresh products traded in international
markets, only eight hold the Supreme Quality Certification. This
certification gives the consumer the certainty that the products are of
high quality although their prices are 10 percent higher than the rest,"
said Mexico Supreme Quality Civil Association Manager Oscar Santamaria.
He added that the certification, which is performed by internationally
recognized private companies, benefits the producers by increasing their
sales up to 25 percent. However, most producers are reluctant about the
benefits since, from their point of view, the campaign to promote the
"Supreme Quality Seal" on international markets is limited. Moreover,
"the acquirement of such seal represents an important economic effort
for most producers, thus far only the most organized are complying with
the international quality standards," said Cesar Salazar, a table grape
producer. Currently, the certified products are: bananas of the
*dominico* variety, mangoes, avocadoes, eggplant, pork and red meat,
table grapes and honey. (Source: *Reforma*, 6/7/04)

**NOSTALGIA OF MEXICANS IN THE UNITED STATES OPENS A MARKET WORTH 12
BILLION DOLLARS**

According to a local newspaper, the migration of Mexicans to the United
States, combined with geographical nearness and cultural background, has
motivated a growing economy, known as "the nostalgia market." In the
United States, 26 million Mexicans have become captive customers for
fresh and canned chiles, fruits and vegetables, prepared salsas, mole,
soft drinks and other products. The demand for products has reached
US\$12 billion annually and is growing at a rate of 8 percent each year.
However, Mexican businessmen have not taken advantage of this
opportunity and have been displaced by businessmen from other countries.
(Source: *El Financiero*, 6/7/04)

**U.S. SUPREME COURT DECISION UNCLEAR TO MEXICAN TRUCKERS**

According to a local newspaper, the Secretariat of Economy (SE) and the
Secretariat of Communications and Transport (SCT) stated that regardless
of the U.S. Supreme Court's decision to allow entrance of Mexican trucks
to the United States, there still exists discriminatory regulations that
hinder the opening of the border to Mexican trucks. SE and SCT assured
that they would watch closely that the provisions of the NAFTA are
fulfilled. The National Association of Private Transport and the
Association of Mexican Truckers consider the resolution an opportunity
for their trucks to enter the most important market in the world.
(Source: *El Financiero, Reforma* and *El Universal*, 6/7/04)

**REPORT FINDS MEXICO THE NET LOSER IN NAFTA**

According to a report of the Carnegie Endowment for International Peace,
the North American Free Trade Agreement (NAFTA) has failed to generate
substantial job growth in Mexico, has hurt hundreds of thousands of
subsistence farmers there and has had a \'minuscule\' net effect on jobs
in the United States. The report, which was commissioned by the United
Nations to analyze the effects of free trade agreements in the region,
pointed out that the result for Mexico was negative, despite the fact
that the three NAFTA countries have increased their economic outputs.
The report was issued to coincide with new trade negotiations in Miami
aimed at the adoption of a NAFTA-like pact for the entire Western
Hemisphere, and seeks to debunk the fears of American labor that NAFTA
will lure large numbers of jobs to low-wage Mexico, as well as hopes of
the trade deal\'s proponents that it will lead to rising wages and
declines in income inequality and illegal immigration. Conclusions from
the report include:

 NAFTA has not helped the Mexican economy keep pace with growing demand
for jobs.

 NAFTA-led productivity growth in the past decade has not translated
into increased wages.

 NAFTA has not stemmed the flow of Mexican emigration to the United
States.

 The fear of a "race to the bottom" in environmental regulation has
proved unfounded.

 Mexico's evolution toward a modern, export-oriented agricultural
sector has failed to deliver the anticipated environmental benefits of
reduced deforestation and tillage.

The report makes clear that NAFTA has been neither the disaster its
opponents predicted nor the savior hailed by its supporters. But while
the trade agreement's overall impact is muddled, for Mexico's rural
households the picture is clear-and bleak. NAFTA accelerated Mexico's
transition to a liberalized economy without creating the necessary
conditions for its rural citizens to respond to the transition of
trading with two of the biggest economies in the world. (Source: *La
Jornada*, 6/4/04)

REPORTS RECENTLY SUBMITTED BY FAS/MEXICO CITY

+-------+----------------------------------------------------+--------+
| # N   | # TITLE                                            | # DATE |
| UMBER |                                                    |        |
+-------+----------------------------------------------------+--------+
| M     | Weekly Highlights & Hot Bites, Issue #21           | 6/3/04 |
| X4069 |                                                    |        |
+-------+----------------------------------------------------+--------+
| M     | Summary of Mexican Government Study on the Effects | 6/7/04 |
| X4070 | of NAFTA on Mexican Agriculture                    |        |
+-------+----------------------------------------------------+--------+

We are available at **<http://www.fas-la.com/mexico>** or visit our
headquarters' home page at **http://www.fas.usda.gov** for a complete
selection of FAS\' worldwide agricultural reporting.

**FAS/MEXICO EMAIL**

To reach us at FAS/Mexico City:

**[AgMexico@usda.gov]{.underline}** and/or
[**ATOMexico@usda.gov**](mailto:ATOMexico@usda.gov)