Required Report - public distribution **Date:** 12/11/2002

**GAIN Report Number:** MX2167

MX2167

**Mexico**

**Agricultural Situation**

**Weekly Highlights & Hot Bites, Issue #42**

2002

**Approved by:**

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

#### U. S. Embassy

**Prepared by:**

Benjamin Juarez, Dulce Flores & Lisa Anderson

#### Report Highlights: CARLA HILLS SAYS NO TO NAFTA RENEGOTIATION; CLAIMS SUCCESS\* LOWER HOUSE DEMANDS FOX ACT BEFORE FARMING CRISIS HITS\* SENATORS CREATE NEW COALITION TO IMPROVE AG SECTOR\* NOTHING AGAINST NAFTA\* FEDERAL BUDGET COULD GO UP FOR VOTE THIS WEEK, LEGISLATOR SAYS\* TRADE PACT SENDS MEXICO\'S FARMERS INTO THE STREETS TO PROTEST\*U.S. OFFICIAL: FARMERS\' PAIN WORTH FREE TRADE GAIN\* FOX ASKED TO RENEGOTIATE SOME NAFTA AGREEMENTS\* AGRICULTURAL GROWERS FEAR SUBSIDIES, NOT THE MARKET OPENING\* ANGRY FARMERS TAKE TO THE CAPITAL\'S STREETS \... AGAIN\* NEW U.S.-MEXICO TOMATO SUSPENSION AGREEMENT\* U.S. EMBASSY RESPONDS TO NAFTA MISPERCEPTIONS\* USDOC REITERATES CONCERN OVER POSSIBLE PROTECTIONIST MEASURES\* SENATE ACKNOWLEDGES NEED TO RENEGOTIATE AG CHAPTER OF NAFTA\* ACADEMICS IN FAVOR OF A REVIEW ON NAFTA\* MEXICAN AG PROBLEMS BLAMED ON INACTION\* ECONOMISTS CITE NAFTA'S PROS AND CONS\* CAMPESINO GROUPS BLAME U.S. FARM SUBSIDIES\* WORKER GROUP TO PROTEST 2003 REPEAL OF AG TARIFFS\* STATE OF AGRARIAN REFORM\* CANADIAN PRIME MINISTER CRITICIZES U.S. FARM SUBSIDIES\* CONGRESSWOMAN PREDICTS DIRE RESULTS FROM 2003\* CONGRESS URGES FOX TO TAKE ACTION OR FACE BOYCOTT U.S. AG GOODS\* SENATE CLAIMS U.S. VIOLATING NAFTA\* ACADEMICS WARY ABOUT POSTPONING 2003\* MEXICAN ECONOMY NEEDS MORE FUNDING, CLAIMS ENVIRONMENT MINISTER\* NAFTA NEGOTIATOR AFFIRMS NAFTA'S BENEFITS\* ECONOMIA SETS TARGET GOAL FOR REDUCING SMUGGLING\* SENATE APPROVES REFORMS TO FOREIGN TRADE LAW\* FARM GROUPS CONTINUE TO CALL FOR MORATORIUM\* MEXICAN BISHOPS CAUTIOUS ABOUT FREE TRADE\* KEY LIME PRODUCERS TO GET ORGANIZED UNDER AN ARMOUR PLAN\* MEXICAN AVOCADO PRODUCTION FACING STRUCTURAL CHALLENGES\*

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.**

\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*

#### CARLA HILLS SAYS NO TO NAFTA RENEGOTIATION; CLAIMS SUCCESS

Ten years after the historical signature of the North America Free Trade
Agreement (NAFTA), Carla Hills, the American negotiator of that time,
affirms that it has been \"an enormous success.\" She opposes vigorously
the renegotiation of any chapter of it, including the agricultural one.
\"Just seeing the statistics, as a result of the permanent trade
liberation and lowering of trade barriers, we can notice that the
commercial expansion between Mexico, the United States, and Canada has
been explosive,\" she declared. The former U.S. trade representative
stated that the increasing displeasure of the Mexican farmers is being
badly channeled, since the problem is not NAFTA but the U.S. Farm Bill,
the law signed by President George W. Bush that grants U.S. \$190
billion dollars in subsidies in ten years for American farmers.
\"Personally, I am very disappointed with the Farm Bill, because I
believe that it goes in the opposite direction (of the market
opening).\" Hills defended the market opening. She argued that it is
reciprocal and that just as the U.S. farmers will have free access to
the Mexican market, so will Mexican farmers have access to the U.S.
market. \"The NAFTA is not the problem; the problem is the internal
supports for the U.S. farmers, which represent a \"trade distortion.\"
She also said that if it had been in her hands, she would not had
favored these \"enormous supports\" for agriculture growers, because
there are other ways to help them. \"The agricultural countries of the
world are being terribly affected by the nations that are giving export
subsidies.\" In addition to the United States, most of the European
Union, beginning with France, protects their agricultural growers from
foreign competition. The government of Mexico fears that in January 1,
2003, the due date when import tariffs on U.S. and Canada agricultural
products will be eliminated under NAFTA, the Mexican agricultural
production will face unfair competition due to the subsidies of farm
bill. (Source: El Financiero; 12/9/2002).

## 

#### LOWER HOUSE DEMANDS FOX ACT BEFORE FARMING CRISIS HITS

On Friday, December 5, 2002, the political forces in the Lower House
demanded that President Vicente Fox act immediately to solve the
economic and social crisis that threatens farmers because of the next
phase of North American trade liberalization in 2003. The legislators
also demanded the executive branch to enact immediately the emergency
measures included in the Chapter 8 of the Free Trade Agreement of North
America (NAFTA), regarding the suspension of imports or the imposition
of import duties. More than 20 agricultural import duties are due to be
lifted on January 1, 2003, nine years after the NAFTA went into effect.
The small farmers, or \"campesinos,\" fear a new wave of cheap U.S.
products will decimate Mexico\'s delicate agricultural sector and cost
thousands of rural jobs. \"If President Vicente Fox does not act soon,
he can only expect massive mobilizations across the country,\" said
Deputy Jaime Rodriguez, who heads the Chamber\'s Agriculture Committee.
Rodriguez called on Fox to enact protectionist tariffs under NAFTA
emergency clauses, saying even massive increases to the agricultural
budget will not be enough to save campesinos. The members of the joint
committees of Agriculture, Livestock, and Social Development considered
that the emergency clauses would have to prevail for three years. In
addition, the legislators requested that the media promote a campaign to
buy only Mexican products in order to pressure the Government of the
United States. For the Congressmen, the legislative branch does not have
any legal recourses to stop the market opening. They warned, however, of
massive protests nationwide if the president does not enact emergency
trade barriers to protect Mexican farmers ill prepared for the next
phase of NAFTA liberalization. Campesino protests have become
increasingly common over the past two years, as farmers have blocked
highways and laid siege to government offices in search of higher
subsidies. U.S. farmers receive an average of 20,800 dollars each
annually. Mexico only manages to dole out about 720 dollars a year to
its farmers. (Source: Reforma; The News; 12/7/2002).

## 

#### SENATORS CREATE NEW COALITION TO IMPROVE AG SECTOR 

On December 5, 2002, the Mexican Senate approved the creation of a
national coalition for the defense of the Mexican countryside (FNDCM).
It includes the executive and legislative branches, agricultural
organizations and academic centers. The FNDCM attempts to face the
"dramatic adverse effects" of the North American Free Trade Agreement
(NAFTA). This resolution arose as a result of a proposal of legislator
Jose Antonio Aguilar Bodegas, from the PRI party. During a prolonged
discussion, all political factions agreed in demanding a bigger budget
for the agricultural sector. Specifically, the federal 2003 Executive\'s
budget proposal for the Agriculture Secretariat must be increased to
13.0 billion pesos (U.S\$1.3 billion). Senator Jose Bonilla, from the
PRI party, proposed this increase in order to allocate higher subsidies
as part of the agricultural armor package. Among the senate members that
support this proposal are Jeffrey Jones from the PAN party, Ricardo
Guerra from PRD party, and Joaquin Montaño Yamuni and Lauro Diaz-Castro
of the PRI party. (Source: El Financiero, La Jornada; 12/6/2002).

## 

#### NOTHING AGAINST NAFTA 

Mexico and the United States are exploring mechanisms that, \"without
violating NAFTA,\" can generate solutions in those agricultural sectors
experiencing trade problems, states the secretary of Economy, Luis
Ernesto Derbez. Within the legal framework of the Free Trade Agreement
of North America (NAFTA), \"these issues can be solved with goodwill and
hard work,\" he said. Derbez avoided specifying what sectors could enter
into this process. He stated, however, that agricultural producers must
be protagonists and cited, as an example of such, the case of the second
suspension agreement of the Mexican tomato antidumping case. Derbez
rejected vigorously the possibility that the Executive branch is trying
to postpone the 2003 lowering of duties of NAFTA in agricultural
products. \"As in the case of tomatoes, we are looking for flexible
inside solutions\... within the NAFTA." Also, Faryar Shirzad, Under
Secretary of International Trade Issues of the U.S. Department of
Commerce, concurred: \"I am not sure if renegotiating the NAFTA would be
beneficial for the parties involved. A stable relationship is basic in
having good growth (of the trade) like we have had up to now.\" The
Mexican Secretary of Agriculture, Javier Usabiaga, mentioned that the
poultry sector is one in which negotiated solutions will be reached.
"Also we are working with the pork sector, but it will be more difficult
because the Mexican part does not have that union, an empathy of ideas,
nor a unified objective.\" About the sugar and high fructose corn syrup,
Derbez was asked if Mexico and the U.S. have already come to an
agreement. Unfortunately, he said, these issues will not be resolved
until the documents are signed. Meanwhile, Alejandro Gomez Strozzi, head
of the Unit of Commercial International Practices (UPCI), affirmed that
the negotiated safeguard for leg and chicken quarters -- the
investigation of which was initiated last week - will have a speedy
resolution. It will take less than the expected one-year period in
ordinary safeguards. (Source: El Financiero; 12/5/2002).

## 

#### FEDERAL BUDGET COULD GO UP FOR VOTE THIS WEEK, LEGISLATOR SAYS

Congress could pass the revenue half of the 2003 budget as early as this
week, the President of the Congressional Finance Committee said on
Wednesday, December 4, 2002. Analysts are more skeptical, however,
predicting that a special session will be needed to approve the
nation\'s financial plans for next year. Oscar Levin Coppel, President
of the Chamber of Deputies Finance Committee, stated most of the tax and
revenue bills were nearly ready for votes. \"We have already sent the
Rural Financing Law to the floor and today we are preparing to vote on
the income tax bill and vehicle taxes,\" he said. \"It is likely that we
will be able to consider service taxes and the Value-Added Tax (IVA)
Thursday or Friday.\" Levin was confident the entire revenue package
could be sent to the floor by the weekend, allowing for a vote by the
full Chamber of Deputies as early as Tuesday. Levin said committee
members were \"for the most part\" in agreement on the amendments to the
proposals sent by the Fox administration to Congress last month.
Analysts are predicting the budget will not be approved by the December
15 deadline. They point out that opposition deputies are criticizing
several of the government\'s tax proposals and its conservative
prediction that oil prices will remain at 17 dollars per barrel.
(Source: The News; 12/5/2002).

**TRADE PACT SENDS MEXICO\'S FARMERS INTO THE STREETS TO PROTEST**

Mexico\'s farmers are rebelling, blocking streets and highways,
demonstrating day after day at the Agriculture Ministry in Mexico City
and building barricades out of corn sacks at the entrance of the Senate.
The angry \"campesinos\" from across the country have united to demand
protection from foreign competition as a provision is about to take
effect in the North American Free Trade Agreement (NAFTA) that would
eliminate a bushel-full of import duties on agricultural products. On
January 1 - the ninth anniversary of the trade pact signed by the United
States, Canada and Mexico -- the remaining duties on more than 20 items
such as wheat, rice, dairy products, poultry and pork will disappear,
and farmer's organizations fear that the move will cost Mexico thousands
of rural jobs. Duties on corn, beans and sugar will remain until 2008,
but the entire sector already finds itself struggling in a market
flooded by subsidized, low-cost imports from the United States. The
farmers\' arguments are not falling on deaf ears. Even President Vicente
Fox, a convinced economic liberal, has said he is concerned by the
approaching tariff elimination. It could do considerable damage to
Mexico\'s agricultural industry if the United States does not lower its
large subsidies, he has said. NAFTA critics and opposition politicians
are demanding that Fox\'s government renegotiate the trade agreement,
saying their criticisms of the trade pact has only been proven since it
went into effect at the beginning of 1994. Mexico\'s agricultural
imports have increased enormously as the much higher farm subsidies from
countries north of its border wipe away any possibility that its farmers
could compete on an equal footing, they argued, and the people who are
paying under NAFTA are the 25 million Mexican farm workers who are
already living in poverty at a much higher rate than the rest of the
country. Despite those arguments, the farmers have little chance of
winning a reopening of NAFTA talks. Fox\'s government has repeatedly
denounced the U.S. farm subsidies but has been careful not to call for
new NAFTA negotiations because the pact has been a huge success for
other sectors of Mexico\'s economy. Last year, Mexico recorded a trade
surplus of nearly 27 billion dollars with the United States. It might
import corn from its neighbor, but it earns far more money on the many
cars it exports there. And thanks to NAFTA, Mexico has largely been
spared infection from the financial crisis sweeping Latin America this
year. Besides, the United States has already rejected a reopening of
NAFTA talks and Deputy Agriculture Secretary Francisco Lopez Tostado
warned that undoing NAFTA would prove dangerous. In addition, Fox\'s
government said NAFTA is not to blame for the antiquated Mexican farm
industry\'s lack of competitiveness. It blames the policies of the
previous government of the Institutional Revolutionary Party (PRI),
which ruled Mexico for 71 years. In the meantime, though, Fox has
pledged 102 billion pesos (U.S.\$10.2 billion) in farm aid in 2003, but
farmers groups have criticized the amount, which is a 7.7-percent hike
over last year, as too little. So farmers continue their protests,
carrying signs that say, \"NAFTA equals death\" and marching in Mexico
City without much chance of winning their argument. (Source: The News;
12/5/2002)

#### U.S. OFFICIAL: FARMERS\' PAIN WORTH FREE TRADE GAIN

With the deadline for the abolition of most tariffs on U.S. farm
products looming, a top U.S. trade official on Tuesday, December 3, 2003
said \"getting the economic fundamentals right\" in agriculture must be
the priority for both Mexico and the United States. U.S. Department of
Commerce Under Secretary for International Trade Administration, Grant
Aldonas, said President Vicente Fox\'s administration had \"been trying
to address legitimate human concerns\" over the consequences of the
trade opening in January. Mexican officials last week said they will not
ask the administration of U.S. President George W. Bush to change NAFTA
to give protection to Mexican farmers. Aldonas said the Bush
administration is working with Fox \"to identify best practices that
actually will improve the economics of rural communities both in Mexico
and the United States.\" But Aldonas said, for some people, economic
opportunities \"probably will not exist in agriculture over the long
haul because of the lack of competitiveness.\" Nor will retreating
behind trade barriers save the sector, he warned. \"Preventing other
Mexicans from having the opportunities that exports to the United States
can provide \... is not the answer to solving the problems of
campesinos,\" he said. Defending NAFTA, Aldonas said the ten year-old
agreement between Mexico, Canada and the United States was \"a better
model\" than the European Union, which relies on high-ranking
bureaucrats to set agricultural policy. In NAFTA \"you have three
governments coming together to say the market should decide. The market
is always going to be more efficient than mandarins in Brussels trying
to make a determination about which countries are going to succeed in
(growing) tangerines,\" he said. (Source: The News; 12/4/2002).

#### FOX ASKED TO RENEGOTIATE SOME NAFTA AGREEMENTS

Lawmakers on Tuesday, December 3, 2002, told President Vicente Fox to
come to the aid of the embattled farm sector and renegotiate some terms
of the NAFTA trade pact to keep tariffs on U.S. and Canada farm goods,
set to be eliminated on January 1. Mexican farmers fear they will be
ruined by a flood of U.S. farm imports starting next year when tariffs
in most agricultural goods crossing NAFTA borders are lifted completely.
\"This is a mandate to the executive," Jaime Rodriguez-Lopez, the
president of the lower house\'s agriculture commission told reporters
after meeting with hundreds of farmers gathered at the doors of the
Congress to demand protection from U.S. imports. Rodriguez said a
document sent to Fox, a rancher in his own right, was approved by the
Lower House, in recent days and that it bears signatures from lawmakers
of all parties. \"Beginning these negotiations cannot be interpreted
internally or externally as simply protectionist or as an expression
against NAFTA, but as a recognition of political and economic realities,
\"lawmakers said in the document. Legislators also ask Fox to enact
Chapter VIII of the NAFTA pact, allowing him to declare a state of
emergency in the countryside and renegotiate the terms of farm imports.
The chapter can be enacted when a country feels its producers are being
harmed by unfair competition from foreign imported goods. \"The
consumers dependence in imported goods and the growing rural misery (in
Mexico) cannot be disguised,\" legislators wrote in the document.
Farmers gathered outside Congress on Tuesday, December 3, asked for a
three-year extension to the market opening to better prepare themselves
for the increased competition from protected and subsidized goods coming
from the United States. Legislators said in the document that past
governments never live up to promises made when NAFTA was signed to
modernize Mexican farming. (Source: The News; 12/4/2002).

#### AGRICULTURAL GROWERS FEAR SUBSIDIES, NOT THE MARKET OPENING

A special report examines how Mexican farmers will be adversely affected
by the repeal of agricultural import duties next year under NAFTA. The
report states that more than the penultimate NAFTA repeal of
agricultural import duties, the farming producers fear the worldwide
tendency of greater subsidies to the countryside. This goes in opposite
direction of the support that Mexican agricultural sector receives. With
a lower budget than the previous year, an agriculture armor-package that
has been announced without definite policies in place, and a neighbor
willing to overprotect its agricultural production, the Mexican
countryside and its 8.6 million actors will undergo the worse drought of
economic resources of last the five years, the report stated. In a last
effort, the organizations of agricultural businessmen and farmers will
lobbying and protest to the Mexican Congress, in order to modify the
proposed budget for the agricultural sector. The proposed budget was
sent by the executive branch to the legislative one, recently. But it is
smaller by almost 2 billion pesos with respect to the 2002 budget. A
great number of organizations are in agreement about reviewing the NAFTA
agriculture chapter, independent of whether the agriculture budget will
be increased or not. This review is necessary in order to balance the
market conditions between Mexico and the United States, they claim. The
U.S., however, refuses to renegotiate. The article also stated that the
so-called Agricultural-Armor package is frustrating because the proposed
2003 budget for the Agriculture Ministry (SAGARPA) is lower than in
2002. Moreover, it does not include special funds for this armor
package. Initially, the armor package was a national priority, but
suddenly it disappeared from Javier Usabiaga, the Secretary of
Agriculture's vocabulary. Also, the agriculture opening became a fact of
full myth for the Economy secretary, Luis Ernesto Derbez. Meanwhile,
according to President Fox, the media has exaggerated the adverse
impacts of the opening, "as in fact, the impact is minimum.\" The
deception and the claims of the farming sector, however, forced
President Fox to reconsider the idea of the agriculture-armor. As a
result, Fox announced a budget of nearly 103 billion pesos (USD\$10.3
billion) for this armor-package. This figure, however, includes the
budgets of other ministries that administer rural programs which do not
support production agriculture. At the same time, agricultural
businessmen requested a SAGARPA budget of 47.7 billion pesos (USD\$ 4.7
million), or 36 percent higher than originally anticipated in 2003.
Farmer organizations are requesting a budget of 67. 9 million pesos
(USD\$ 7 million). (Source: El Universal; 12/2/2002)

#### ANGRY FARMERS TAKE TO THE CAPITAL\'S STREETS \... AGAIN

On Monday, December 2, 2003, over 1,000 campesinos from across the
nation marched from one government agency to the next, demanding more
aid and a moratorium on Mexico\'s agricultural free-trade agreements.
The farmers, from different grass roots organizations in over 20 states,
marched first to the Agriculture Secretariat, where police nearly drove
them from the premises, and then to the offices of the Interior
Secretariat, hoping to find someone in the government willing to take up
their petition of complaints. At the top of their list of demands is the
suspension of the agricultural provisions of the North American Free
Trade Agreement (NAFTA). On January 1, 2003, trade of farm products
between Mexico, the United States and Canada will become nearly
completely liberalized as remaining tariffs on all but a handful of
commodities disappear. \"NAFTA is killing us,\" said Jesus Palamares, a
tall, graying corn farmer from the northern state of Sinaloa. \"And our
government does not care, they are not giving us any help.\" While
Mexico\'s exporters of certain fruits and vegetables have thrived under
NAFTA, the nation\'s millions of small farmers complain cheaper U.S.
imports of grains and meat have undercut their livelihood. Alberto
Gomez, a farmer from the central state of Michoacan and president of the
National Union of Campesino and Autonomous Organizations (UNORCA) that
helped organize the march, said the government needed to change its
agricultural policies to bolster small farmers. \"We do not want to
immigrate to the cities or the United States just to make a decent
living. We want to keep living in our communities, but we need a
moratorium on NAFTA,\" said Gomez. \"This is not about us working harder
out there, it's about changing policies. We need aid that promotes and
develops our capacities, so we can be profitable and competitive.\"
Monday\'s protest is only the latest in a rising tide of protesting
campesinos bringing their grievances to the capital\'s streets. But the
administration\'s response is still wavering. Agriculture Secretary
Javier Usabiaga - whose successful enterprise of exporting of freeze
dried garlic has earned him the title of \"Garlic King\" - has said
small farmers working fields of corn and beans just \"need to find a
different job.\" But President Vicente Fox, well aware of midterm
elections next year, unveiled new farm subsidies last month in an
attempt to appease the countryside. Opposition parties hold far greater
sway in rural areas than Fox\'s National Action Party (PAN), and
analysts say Fox will make stronger overtures to appease farmers in
coming months. (Source: The News; 12/3/2002)

#### NEW U.S.-MEXICO TOMATO SUSPENSION AGREEMENT

On December 4, 2002, officials from the U.S. Department of Commerce and
Mexican growers/exporters of tomato signed in Mexico an antidumping
suspension agreement which will allow tomatoes to be exported to the
U.S. at an agreed-upon price and no compensatory duties. The Mexican
Secretary of Economy (SE), Mr. Derbez, and the Mexican Secretary of
Agriculture (SAGARPA), Mr. Usabiaga, were witnesses at the signing
ceremony. The reference price for exporting fresh tomatoes is now 17.2
cents per pound from July1 to October 22, the summer season, and 21.08
cents per pound from October 23 to June 30, the winter season. This
measure will be in force for 5 years after it is published in the U.S.
Federal Register. Mr. Sergio Esquer, President of the Commission of
Investigation and Protection of Horticultural Products in Sinaloa,
indicated that this agreement is substantially better than the previous
one because it contains two mechanisms that will allow a more equal
participation of all Mexican exporters: 1) an official regulation of
food safety enforced by SAGARPA, and 2) an automatic export permit
issued by SE. (Source: The News, Reforma, Excelsior, 12/05/02).

#### U.S. EMBASSY RESPONDS TO NAFTA MISPERCEPTIONS

The U.S. Embassy released an information sheet to clear up
misperceptions about the effects of the repeal of agricultural tariffs
in 2003 upon Mexican agriculture. The release pointed out that Mexican
agriculture suffers from structural problems that are unrelated to
NAFTA. In a related development, the U.S. Embassy's Agriculture Attaché
stated on television that the Mexican agriculture sector had obtained
great benefits from NAFTA, that jobs had been created, and that Mexicans
had access to a larger supply of products because of the trade
agreement, and therefore, there were no grounds to criticize it.
(Source: Reforma, Milenio; 12/6/02; Televisa; 12/9/02).

**USDOC REITERATES CONCERN OVER POSSIBLE PROTECTIONIST MEASURES**

Department of Commerce U/S for International Trade Grant Aldonas said
the United States was concerned about protectionist measures Mexico
could apply on U.S. exports, such as chicken and other farming products,
and that U.S. authorities would make sure that Mexico was complying with
WTO regulations. (Source: Reforma, Financiero, Universal, Jornada,
Milenio; 12/4/02).

##### 

#### SENATE ACKNOWLEDGES NEED TO RENEGOTIATE AG CHAPTER OF NAFTA

PAN, PRI, and PRD senate leaders agreed that NAFTA needed to be
renegotiated, especially regarding its agricultural chapters. The
senators acknowledged that NAFTA had brought economic benefits to
Mexico, but they argued that the opening of the agricultural sector and
US farm subsidies had contributed to the Mexican agricultural crisis.
Federal deputies will reportedly meet with U.S. legislators in January
to point out the "sensitivity" of the problems of Mexican agriculture
and to propose the creation of a bilateral or trilateral fund to support
the transition of the agricultural sector. (Source: Reforma, Milenio;
12/5/02).

#### ACADEMICS IN FAVOR OF A REVIEW ON NAFTA

During a press conference, academics from the National Autonomous
University of Mexico (UNAM) and the Chapingo Autonomous University
(Agricultural University) indicated that the large asymmetries in the
agricultural sectors between Mexico and the other NAFTA countries should
be the base for the re-negotiation of the NAFTA. These academics turned
in a document to the House of Representatives requesting a review on
agrifood issues under NAFTA. These academics pointed out that for 2003
there will be dramatic effects due to the opening of trade under NAFTA,
impacting the poultry, pork and meat sectors amongst others. (Source: El
Financiero 12/09/02).

#### MEXICAN AG PROBLEMS BLAMED ON INACTION

Former Mexican President Carlos Salinas blamed the crisis of Mexican
agriculture on former President Ernesto Zedillo's failure to provide
federal support for the sector, which was ostensibly permitted under
NAFTA. Salinas is currently in Washington to attend a conference on the
10^th^ anniversary of NAFTA, which will also be attended by former
President George Bush and former Canadian Prime Minister Brian Mulroney.
During his scheduled speech, he is expected to call for a migration
agreement to advance the accomplishments of NAFTA and to protect the
labor and human rights of migrants. (Source: Reforma, Financiero,
Universal, Milenio, Televisa; 12/9/02).

#### ECONOMISTS CITE NAFTA'S PROS AND CONS

Economists claimed that NAFTA had benefited urban populations in Mexico,
but said that rural communities had lagged behind. Alejandro Ibarra
Yunes, a researcher from the Technological Institute of Monterrey, said
that Mexican farmers faced unfair competition from U.S. farm subsidies.
Another report reviews NAFTA's accomplishments by each economic sector.
(Source: Reforma, Universal, TV Azteca; 12/9/02).

#### CAMPESINO GROUPS BLAME U.S. FARM SUBSIDIES

Heladio Ramirez, leader of the National Farm Workers' Confederation
(CNC), denounced the failure of the development model for Mexican
agriculture and complained that Mexican farmers could not compete with
the enormous subsidies granted to U.S. farmers. (Source: Reforma,
Milenio; 12/9/02).

#### WORKER GROUP TO PROTEST 2003 REPEAL OF AG TARIFFS

The National Union of Workers (UNT) will join a march on the Chamber of
Deputies this Tuesday to protest the repeal of agricultural tariffs
under NAFTA. (Source: Universal; 12/9/02).

#### STATE OF AGRARIAN REFORM

Ten years after former President Carlos Salinas attempted to reform
Mexican agrarian laws, less than one percent of community-owned land
(ejidos) has been turned into marketable real estate. The intention of
agrarian reform was to promote investment in Mexico's rural communities.
(Source: Reforma, 12/6/02).

#### CANADIAN PRIME MINISTER CRITICIZES U.S. FARM SUBSIDIES

Former Canadian Prime Minister Brian Mulroney said that U.S. farm
subsidies were "unacceptable," and that these types of policies were
very unfair for developing countries like Mexico, who needed access to
developed countries' markets. (Source: Reforma, Jornada, Milenio;
12/8/02).

#### CONGRESSWOMAN PREDICTS DIRE RESULTS FROM 2003

PRI Deputy Irma Pineyro, president of the Chamber of Deputies Commission
of Population, Borders, and Migration Issues, said the elimination of
agriculture tariffs in 2003 would have terrible effects not only on
Mexican agriculture, but that it would increase illegal migration into
the United States to unprecedented levels. (Source: Universal; 12/8/02).

#### CONGRESS URGES FOX TO TAKE ACTION OR FACE BOYCOTT U.S. AG GOODS

Deputies from the Commission on Agriculture and Rural Development urged
President Fox to adopt measures against the impact of tariffs
elimination in 2003, and said they would promote a boycott on the
consumption of U.S. farming products in Mexico. (Source: Reforma,
Universal, Jornada, Milenio; 12/7/02).

#### SENATE CLAIMS U.S. VIOLATING NAFTA

The Senate requested President Fox to demand the United States to agree
to buy the Mexican surpluses of sugar, because by not doing so the USG
was violating NAFTA. Regarding this issue, PRI Senator Fidel Herrera
said Mexico should not agree to eliminate its agriculture tariffs, since
the United States was not complying entirely with NAFTA. (Source:
Jornada, 12/7/02).

#### ACADEMICS WARY ABOUT POSTPONING 2003

Academics from the CIDE said NAFTA included mechanisms that would permit
certain reforms to postpone the elimination of agriculture tariffs in
2003, but that it would not be convenient for Mexico because the United
States could demand access to strategic Mexican sectors. (Source:
Reforma; 12/7/02)

#### MEXICAN ECONOMY NEEDS MORE FUNDING, CLAIMS ENVIRONMENT MINISTER

Environmental Secretary Victor Lichtinger said NAFTA's greatest flaw was
that the United States and Canada had not provided Mexico with any
financing to build economic equilibrium within the North American
region, in contrast with mechanisms of the sort implemented within the
European Union. (Source: Reforma; 12/7/02).

#### NAFTA NEGOTIATOR AFFIRMS NAFTA'S BENEFITS

Jaime Zabludovsky, one of Mexico's main negotiators for NAFTA, said that
its results had exceeded the most optimistic projections. Zabludovsky
rejected the idea that negotiating the agricultural sector had been a
mistake. (Source: Reforma, Financiero; 12/4/02).

#### ECONOMIA SETS TARGET GOAL FOR REDUCING SMUGGLING

Economic Secretary Luis Ernesto Derbez said that as a preliminary step
toward eliminating contraband goods in Mexico, the federal government's
target goal for 2006 was to reduce piracy by 10-15 percent. The Chamber
of Deputies recently added piracy to its list of organized crimes.
(Source: Reforma, Televisa; 12/4/02).

#### SENATE APPROVES REFORMS TO FOREIGN TRADE LAW

The Senate approved several reforms to the National Foreign Trade Law
aiming to strengthen mechanisms against unequal competition, especially
regarding the agricultural sector. (Source: Financiero, Jornada;
12/4/02).

#### FARM GROUPS CONTINUE TO CALL FOR MORATORIUM 

During its sixth annual assembly, the National Association of Farm
Enterprises (ANEC) called for a three-year moratorium on the repeal of
agricultural tariffs under NAFTA. Academic researchers argued that the
GOM had negotiated the agricultural chapters of NAFTA "badly," and had
not established a strong foundation to prepare Mexico's agricultural
sector to face competition in 2003. (Source: Financiero; 12/3/02).

#### MEXICAN BISHOPS CAUTIOUS ABOUT FREE TRADE

Mexican bishops warned that Mexico would "head straight into a collapse"
if it continued following the current economic model. Saltillo Bishop
Raul Vera said that Mexico had "already begun to notice reactions" to
the repeal of agricultural tariffs under NAFTA, the development of the
FTAA, and the Puebla-Panama Plan. (Source: Milenio; 12/3/02).

#### KEY LIME PRODUCERS TO GET ORGANIZED UNDER AN ARMOUR PLAN

Producers of key limes in the state of Colima, are getting organized
under an "Armour Plan" in order to protect their product. However, this
plan consists more in establishing an organization than in economic
support. The plan will allow key lime producers to establish technical
assistance throughout the production cycle. This entails technical
assistance at the field, commercialization, and financial level. The
President for the State Council for Key Limes, Mr. Martinez, assured
that there will not be a significant negative impact for this product
due to the opening of NAFTA, because Mexico is the first world wide
producer. What producers need to accomplish is to have improved
production within the food safety requirements as well as better
technology in the packing process. (Source: Reforma 12/09/02).

#### MEXICAN AVOCADO PRODUCTION FACING STRUCTURAL CHALLENGES

Despite advances in Mexico avocado production, and the opening of new
markets in the United States, Mexican avocado producers still face
structural deficiencies compared to Chilean avocado producers. (Source:
Milenio; 12/9/02).

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

  --------- ---------------------------------------------- --------------
  Number    Title                                          Date

  MX2164    Weekly Highlights & Hot Bites, Issue #41       12/03/02

  MX2165    Monthly Crop Update, November                  12/03/02

  MX2166    Investigation on Bilateral Poultry Safeguards  12/05/02
            on Chicken Leg Quarters                        
  --------- ---------------------------------------------- --------------

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