Required Report - public distribution **Date:** 2/7/2003

**GAIN Report Number:** MX3020

MX3020

### Mexico

**Agricultural Situation**

**Weekly Highlights & Hot Bites, Issue #6**

**NAFTA Update Edition**

2003

**Approved by:**

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

#### U.S. Embassy Mexico City

**Prepared by:**

Jorge Sánchez

**Report Highlights:**

# BEANS ARE A NATIONAL PRIORITY\*TRQs ON U.S. CHICKEN LEG QUARTERS\*MEXICAN SENATE DELEGATION WILL DISCUSS AGRICULTURE\*"DON'T WORRY, SAFEGUARDS WORK JUST FINE"\* "THE LIGHT AT THE END OF THE TUNNEL"\*DON'T EVEN THINK ABOUT IT\*NAFTA BENEFITS MEXICAN EXPORTS\*"PROTESTS AND ULTIMATUMS DON'T RESOLVE ANYTHING"\*DIALOGUE WITH PRESIDENT FOX POSTPONED\*AGRICULTURAL DISCUSSION ROUNDS\*DISCUSSION ROUNDS COMMENCEMENT\* PRI WILL PARTICIPATE IN THE DISCUSSION ROUNDS AND OTHER ACTIVITIES\*"PROTEST U.S. FARM SUBSIDIES"\* "WHAT CRISIS ARE YOU TALKING ABOUT"\*AGRARIAN NATIONAL CONVENTION, CANCELLED\* THE NATIONAL AGRICULTURAL PACT\* THE CAP IS OUT\* INTRODUCING "NAFTA COMMON STOCK"\* ACCORDING TO THE WORLD BANK MEXICO NEEDS TO...\* ANGEL OF INDEPENCE SEIZED BY ANTI-NAFTA PROTESTS\* EVEN FLOW\* TORTILLA MONGOL SUPPORTS THE RURAL SECTOR\* NATIONAL HOLIDAY FANS THE FLAMES OF ANTI-NAFTA SENTIMENT

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.

# 

# BEANS ARE A NATIONAL PRIORITY

On February 5, 2003, Secretary of Agriculture, Javier Usabiaga, admitted
that of all the products adversely affected by the opening of NAFTA's
agricultural chapter, the one the government must pay the greatest
attention to, is beans. (Source: *El Universal*, 2/4/03)

# 

# TRQs ON U.S. CHICKEN LEG QUARTERS

On January 31, 2003, the Secretariat of the Economy (SE) published in
the *Diario Official* (Federal Register) a decree imposing tariff rate
quotas (TRQs) on U.S. chicken leg quarter imports of 50,000 MT.
According to Secretary of the Economy, Fernando Canales Clariond, the
TRQ is to promote competitiveness and help domestic producers. The
products are classified under tariff numbers 0207.13.03 and 0207.14.04.
The TRQ is destined to the northern border line, the border region, and
Puerto Morelos (Cancun). Requests for this TRQ will be accepted during
the six working days following the publication of this agreement.
(Source: OAA, *Diario Official*, 1/31/03)

**MEXICAN SENATE DELEGATION WILL DISCUSS AGRICULTURE**

# A group of Mexican senators, led by Institutional Revolutionary Party (PRI) Senator Silvia Hernandez, head of the Foreign Relations Committee, and a staunch NAFTA supporter, will travel to the United States this week to discuss NAFTA issues with U.S. Representative, Bob Goodlette (R- VA), head of the Agriculture Committee in the U.S. House of Representatives, and Senator Thad Cochran (R- MI), head of the Agriculture Committee in the U.S. Senate. Senator Hernandez said that the purpose of their visit was not to "renegotiate" NAFTA, but to explore ways to improve it. (Source: *Milenio Diario*, 2/3/03)

# 

# "DON'T WORRY, SAFEGUARDS WORK JUST FINE"

On February 5, 2003, Secretary of Agriculture, Javier Usabiaga, opened
the possibility of reviewing individual parts of NAFTA's agricultural
chapter; and cited as proof that NAFTA could work for the Mexican
agricultural sector, and notedthe recent safeguard implementation on
poultry imports). (Source: *El Universal*, 2/4/03)

**"THE LIGHT AT THE END OF THE TUNNEL"**

On February 3, 2003, Antonio Cannan, President of the State of Puebla
Union of Pork Producers (AGRPP), said that Mexico's steps toward
initiating an anti-dumping investigation case against U.S. pork exports
was their "light at the end of the tunnel" to what seemed to be a
promised Armageddon to Mexican farmers. (Source: *Milenio Diario*,
2/3/03)

# DON'T EVEN THINK ABOUT IT

On February 5, 2003, Secretary of Government Affairs, Santiago Creel put
on his game face as he sternly rejected any possibility that upcoming
discussions NAFTA's agricultural chapter could be a viable option for
rescuing the feeble rural sector. (Source: *El Financiero*, 2/6/03)

# 

# NAFTA BENEFITS MEXICAN EXPORTS

Al Anoop Singh, head of the inter-American division of the International
Monetary Fund (IMF) warned of "fragility" among many countries in Latin
America are still vulnerable due to high debts, *dolar-ization*, and
under growth of income inequalities. In the case of Mexico, he showed
that NAFTA has allowed for a dramatic increase in Mexican exports.
(Source: *Reforma*, 2/5/03)

# 

# "PROTESTS AND ULTIMATUMS DON'T RESOLVE ANYTHING"

On February 5, 2003, the governor from the state of Coahuila, Enrique
Martinez and Secretary of Agriculture, Javier Usabiaga, agreed that the
solution to the rural sector's problems would not be solved through
protests or ultimatums, but rather would be championed through open
dialogue and consensus. (Source: *El Universal*, 2/4/03)

**DIALOGUE WITH PRESIDENT FOX POSTPONED**

On February 3, 2003, Presidential spokesman, Rodolfo Elizondo,
downplayed ultimatums made by farming groups. Farming organizations
proposed that a planned dialogue with President Fox be postponed until
they met with representatives from the Agriculture Secretariat, Economic
Secretariat (SE), and the Secretariat of Governmental Affairs.  (Source:
*La Jornada, Milenio Diario*, 2/3/03)

**AGRICULTURAL DISCUSSION ROUNDS**

On February 6, 2003, Under Secretary of Government Affairs, Ramon Martin
Huerta announced that every month, the government's coordinating
councils would participate in "Discussions for a Unified Rural Sector
Governmental Policy." These coordinating councils will be comprised of
representatives of the executive branch, two members from the rural
sector, two members from the private sector, representatives from the
state governors' offices, two members representing legislative groups,
and two designees from the Secretariat of Agriculture (SAGARPA).
(Source: *La Jornada*, 2/7/03)

**DISCUSSION ROUNDS COMMENCEMENT**

On February 6, 2003, the federal government along with farming groups
kicked off "Discussions for a Unified Rural Sector Governmental Policy"
with the hopes of reaching a national pact an aid for the rural sector
"as urgent as possible." The eight discussion rounds will convene from
February 10 through March 5. Mexican congressman Erick Villanueva
insisted that NAFTA's agricultural chapter must be modified. Of the 10
speeches delivered at the ceremony, five main positions could be
distinguished: 1) Secretary of Agriculture, Javier Usabiaga defined the
discussion rounds as "positive to the new democratic order" one with
"openness and desire to exchange and listen to diverse viewpoints;" 2)
Secretary of Government Affairs, Santiago Creel Miranda, said that the
government's posture was "simple, sincere, and honest," he added that
"this debate promises to reach goals that in the past were thought to be
unattainable;" 3) A spokesman for the farming group "The Farmland Can't
Stand Anymore," said there are over 25 million people in the rural
sector that live below the poverty line, and that are vulnerable to the
market opening initiated by NAFTA's agricultural chapter; 4) Secretary
of the Economy, Fernando Canales Clariond said that this was an
excellent forum to promote the 35 million dollars of benefits and
economic development that NAFTA has brought to Mexico, and 5) Speaker of
the Mexican House of Representatives, Erick Villanueva, stated that
"NAFTA benefits have run out and a new agricultural chapter must be
discussed and rewritten, the injustice and inequities are a threat to
national security." (Source: *El* *Financiero, La Jornada*, 2/7/03)

These are the new dates for the discussion rounds:

+--------+---------------+---------------------------------------------+
| # AG   |               |                                             |
| RICULT |               |                                             |
| URE CO |               |                                             |
| ORDINA |               |                                             |
| TING C |               |                                             |
| OUNCIL |               |                                             |
|  DISCU |               |                                             |
| SSION  |               |                                             |
| ROUNDS |               |                                             |
+--------+---------------+---------------------------------------------+
| ##     | ***Date***    | ***Topic***                                 |
| Round  |               |                                             |
+--------+---------------+---------------------------------------------+
| 1      | February      | The role of the rural rector in the         |
|        | 10-12         | national agenda                             |
+--------+---------------+---------------------------------------------+
| 2      | February 13   | Budget and financing for rural sector       |
|        |               | development                                 |
+--------+---------------+---------------------------------------------+
| 3      | February 17   | Development of social rural sector policies |
+--------+---------------+---------------------------------------------+
| 4      | February 18   | Arranging the rural property                |
+--------+---------------+---------------------------------------------+
| 5      | February 19   | Environment and rural sector development    |
+--------+---------------+---------------------------------------------+
| 6      | February 24   | The rural sector and governance under the   |
|        |               | rule of law                                 |
+--------+---------------+---------------------------------------------+
| 7      | February 27   | Legislative agenda for the rural sector     |
+--------+---------------+---------------------------------------------+
| 8      | March 3-5     | NAFTA domestic and international trade      |
+--------+---------------+---------------------------------------------+

**PRI WILL PARTICIPATE IN THE DISCUSSIONS AND OTHER ACTIVITIES**

On February 6, 2003, the PRI party stated that they were willing to
participate in the upcoming agriculture discussions. The PRI will be
sending their heavy hitters such as Senate leader Enrique Jackson and
top Congressional support from Rodriguez Barrera and Beatriz Paredes
Rangel, the National Farm Worker Council (CNC) spokesperson and
supporter. Speaker of the Mexican House of Representatives, Erick
Villanueva, stated that he would meet with U.S. and Canadian officials
to develop a common agricultural policy the NAFTA member countries.
(Source: *Reforma, La Jornada*, 2/7/03)

"**PROTEST U.S. FARM SUBSIDIES"**

On February 3, 2003, state of Zacatecas Governor, Ricardo Monreal, urged
President Fox to consider anti-dumping complaints against U.S. imports
as a way to protest the effects of U.S. farm subsidies. (Source: *El
Universal, El Financiero,* 2/3/03)

# "WHAT CRISIS ARE YOU TALKING ABOUT?"

On February 4, 2003, President Fox stated that the rural sector was in
crisis and assured that the indicators in that sector were better than
some in other sectors of the economy. President Fox affirmed, \"there is
no crisis in the rural sector, in these two years it has grown more than
in other sectors of the economy, significantly more than the national
economy has grown as a whole." Additionally, the Federal Government
accepted the farming organization's terms for the upcoming discussion on
agriculture. (Source: *Reforma, El Financiero, La Jornada*, 2/5/03)

# AGRARIAN NATIONAL CONVENTION, CANCELLED 

Organizers of the Agrarian National Convention, programmed for February
5, 2003, in Querétaro, announced the cancellation of this meeting.
Gloria Peralta, coordinator of the Permanent Agrarian Council (CAP)
stated that there was a possibility that her organization would convene
next week to initiate a dialogue. (Source: *La Jornada*, 2/5/03)

# THE NATIONAL AGRICULTURAL PACT

One day after announcing that the Mexican rural sector "was not
experiencing a crisis," President Fox stated that his administration
would double its efforts to help families suffering from rural poverty. 
He added that the 40 million people living below the poverty line would
not be ignored any longer. The GOM and farming groups agreed that they
would attempt to prepare a National Agricultural Pact by March 15, so
this issue would not interfere or influence the upcoming midterm
elections. (Source: *Reforma, El Universal, El Financiero,* 2/5/03)

# 

# THE CAP IS OUT

On February 5, 2003, Secretary of the Economy, Canales Clariond said he
lamented the absence of the Permanent Agrarian Council (CAP), which
decided not to participate in the federal government's consultation on
the rural area. (Source: *La Jornada*, 2/6/03)

# INTRODUCING "NAFTA COMMON STOCK"

The Institutional Revolutionary Party (PRI) presented to address the
rural crisis. They presented an innovative design called "the NAFTA
common stock" for the Mexican rural sector. This fund will function
similar to that existing in the European Union and will include stronger
protection from foreign markets "basic foods". (Source: *El Universal*,
2/5/03)

# 

# 

# 

# 

# 

# 

# 

# ACCORDING TO THE WORLD BANK MEXICO NEEDS TO...

Investigators at the World Bank explain that they have detected seven
effects from the liberalization of Mexico's agricultural trade via
NAFTA. They emphasize improved allocation of resources, better
efficiency and agricultural productivity, reduction in unit costs to
compete with imports, as well as the elimination of subsidized public
credit and a greater participation in the financing of agriculture by
the private sector. (Source: *Milenio Diario*, 2/5/03)

**ANGEL OF INDEPENCE SEIZED BY ANTI-NAFTA PROTESTS**

On February 5, 2003, in the midst of a national holiday, the 86^th^
Anniversary of the Mexican Constitution, a group of demonstrators
forcefully entered the column of the historic Angel of Independence
monument to hang an anti-NAFTA banner from the top balcony.
Demonstrators were evacuated by city police, but only after they came to
blows with the demonstrators. (Source: *La Jornada*, 2/6/03)

# EVEN FLOW

Alberto Szekely, special international legal adviser to the Foreign
Relations Secretariat (SRE), will attempt to halt two USG plans to
redistribute water from the Colorado River that reportedly would reduce
water flows to Mexico by 56 million cubic meters a year.  The GOM is
also attempting to halt the reinforcement of the All-American Canal.
(Source: *El Financiero*, 2/5/03)

# TORTILLA MONGOL SUPPORTS THE RURAL SECTOR

On February 5, 2003, Robert González Barrera, President of the Gruma
commercial group, publicly exhorted other corporations to support
efforts that benefit the rural sector. Mr. González Barrera is one of
Mexico's wealthiest businessperson and the owner of Maseca, the largest
producer of tortillas. (Source: *La Jornada,* 2/6/03)

# NATIONAL HOLIDAY FANS THE FLAMES OF ANTI-NAFTA SENTIMENT 

On February 5, 2003, during the celebration of the anniversary of the
Mexican Constitution, farmers in the states of Tamaulipas, Sonara,
Jalisco and Nayarit organized marches and sit-downs to express their
aversion to NAFTA's agricultural chapter. In the capital city of Cuidad
Victoria, in the state of Tamaulipas, over 2,000 producers with tractors
and horses marched through the streets proceeding to the center of the
city. (Source: *El Universal*, 2/6/03)

  

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

+-------------+------------------------------------------+------------+
| ##          | ###### Title                             | **Date**   |
| #### Number |                                          |            |
+-------------+------------------------------------------+------------+
| MX3017      | Weekly Highlights & Hot Bites Issue #4   | 01/29/03   |
+-------------+------------------------------------------+------------+
| MX3018      | Weekly Highlights & Hot Bites Issue #5   | 02/04/03   |
+-------------+------------------------------------------+------------+
| MX3019      | Mechanism to allocate the tariff rate    | 02/04/03   |
|             | quota for poultry                        |            |
+-------------+------------------------------------------+------------+

# 

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