Voluntary Report - public distribution

**Date:** 6/29/2004

**GAIN Report Number:** MX4081

081

**Mexico**

**Agricultural Situation**

**Weekly Highlights & Hot Bites, Issue #25**

**2004**

**Approved by:**

![](media/image1.wmf)Lisa Anderson

U.S. Embassy

**Prepared by:**

Kate Snipes, Benjamin Juarez, Dulce Flores, Salvador Trejo and Gabriel
Hernandez

**Report Highlights:**

\*MEXICO\'S OFFICIAL STANDING ON POTENTIAL NEW DISCOVERY OF BSE IN THE
UNITED STATES

\*ATO ORGANIZED U.S. PAVILION AT EXPHOTEL YIELDS OVER \$5 MILLION IN
PROJECTED SALES

\*THE UNITED STATES DELAYS ENTRY OF POULTRY PRODUCTS FROM MEXICO

\*THE U.S.-MEXICO DISPUTE ON FRUCTOSE CONTINUES

\*THE UNITED STATES REQUESTS TIME TO COMMENT ON MEXICO\'S CORN
CONTAMINATION

\*THE UNITED STATES IS WORRIED ABOUT CORN CONTAMINATION IN MEXICO

\*THE MINISTRY OF AGRICULTURE ANNOUNCES A SUPPORT PROGRAM FOR YELLOW
CORN

\*MEXICO STUDIES OPENING THE BORDER TO TRANSGENIC PRODUCTS

\*INDIGENOUS GROUPS REJECT TRANSGENICS

\*DID NAFTA ENHANCE EMPLOYMENT OPPORTUNITIES?

\*THE FINANCE SECRETARIAT INCREASES THE ECONOMIC GROWTH FORECAST

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.

# 

**MEXICO\'S OFFICIAL STANDING ON POTENTIAL NEW DISCOVERY OF BSE IN THE
UNITED STATES**

The following is an official press bulletin (No. 156/04) from the
Mexican Ministry of Agriculture (SAGARPA) in response to USDA's
announcement of an inconclusive test case of BSE.

The National Service of Food Health, Safety and Quality (SENASICA),
announced that if a possible new case of BSE in the United States is
confirmed, preventive measures have already been taken as required by
the World Organization of Animal Health (OIE). If a new case of BSE is
confirmed in the United States, the Secretariat of Agriculture,
Livestock, Rural Development, Fisheries and Food (SAGARPA) has taken
preventive measures on imports of beef meat from the country of origin.

The Animal Plant Health Inspection Service of the United States
(USDA-APHIS) identified a suspicious case of Bovine Spongiform
Ecephalopathy (BSE) as part of the routine rapid screening test used as
part of the enhanced BSE surveillance program in the United States, but
thus far the diagnostics have proved inconclusive. The results must be
ratified or discarded by the National Laboratory of Veterinary Services
of the United States over the next four to seven days.

The Director In Chief of SENASICA, Javier Trujillo Arriaga, explained
that conditions and measures for health control have been taken since
imports of beef meat of U.S. origin were allowed back in Mexico in March
2004 and are in accordance with OIE recommendations. It was reiterated
that the health and safety of agricultural food products that are placed
on consumers' tables in the national and international markets are a
priority for this administration, and this effort has allowed Mexico to
elevate its health status. As a result of the first case of BSE detected
in the United States, SENASICA resorted to implementing severe measures
on imports of beef meat to Mexico.

Currently, Mexico has prohibited the entry into its territory of animals
suspected of being infected with BSE, including downed animals,
specified risk material (SRM) such as the cranium, brain, gangloids,
eyes, spine, spinal cord and dorsal gangloids of the spine of bovines
over the age of 30 months or more, as well as tonsils and distal ileum
of animals of any age. Furthermore, the importers and authorities from
the United States must prove that they have implemented a health system
that prohibits the feeding of ruminants with ruminant protein, avoid the
use of advanced meat recovery systems and the stunning of animals with
compressed air at the moment of slaughter to avoid contamination of the
carcass with SRM, and the retention of carcasses from which samples have
been taken for testing BSE until obtaining negative results.

The health conditions imposed by Mexico on the United States are
reflected in the import health requirements, established by SAGARPA, and
USDA must certify each shipment of beef meat exported to Mexico.

After the first case of BSE, announced by USDA in December 2003, and
after the guidelines for health control were modified and mitigating
risk measures were implemented, only boneless meat can come into Mexico
and only when it does not represent a health risk. (Source: SAGARPA\'s
Web Page, June 28, 2004)

ATO ORGANIZED U.S. PAVILION AT EXPHOTEL YIELDS OVER \$5 MILLION IN
PROJECTED SALES

From June 9-11, 2004, the Agricultural Trade Office endorsed its seventh
annual U.S. Pavilion at EXPHOTEL, the largest trade event in the
Caribbean zone targeting the hotel, restaurant and tourist industry.
Over 30 U.S. firms participated in the Pavilion and as a result, they
estimate more than US\$125,000 in on-site sales and over US\$5 million
in year-long sales. For the first time, a section of the Pavilion was
dedicated to U.S. wines. In addition, *The Wine Institute* sponsored a
wine tasting and seminar for the most important clients in the region.
(Source: *ATO Mexico City*, 6/25/04)

THE UNITED STATES DELAYS ENTRY OF POULTRY PRODUCTS FROM MEXICO

The U.S. government delayed the entry of poultry meat and processed eggs
from Mexico arguing that there are still sanitary problems. The
President of the Mexican Poultry Producers, Cesar de Anda, said that
officials from the governments of Mexico and the United States will meet
this week in Boston to discuss this issue. De Anda added that the delay
is bureaucratic as the sanitary aspects are solved, and that this is the
reason why negotiations are underway between both industries and
governments to comply with the agreement to open the border. (Source:
*Reforma*, 6/22/04)

# THE U.S.-MEXICO DISPUTE ON FRUCTOSE CONTINUES

Mexico and the United States did not reach an agreement on the special
20-percent tax applied by the Mexican government to beverages using high
fructose corn syrup (HFCS). Therefore, U.S. authorities requested that
the WTO establish a special panel to analyze the case and serve as
mediator in the dispute. However, Mexico rejected the creation of that
group, an act which will now give both parties an additional month to
dialogue and possibly resolve the issue. In case a satisfactory
agreement is not reached at the end of this additional month, the United
States has the right to again request the establishment of a dispute
resolution panel -- a request which Mexico cannot reject a second time.
(Source: *Financiero, Milenio* and *Jornada*, 6/23/04)

THE UNITED STATES REQUESTS TIME TO COMMENT ON MEXICO\'S CORN
CONTAMINATION

The U.S. Administrator of the Environmental Protection Agency, Michael
Levitt, kept quiet when non-governmental organizations (NGOs) protested
about the cancellation of the presentation on the contamination of
Oaxaca's native corn cultivations with genetically modified corn. NGOs
protested during the eleventh regular session of the Council of
Ministries of the North American Commission for Environmental
Cooperation (CEC), which was held in Puebla, Mexico, June 21-23, 2004.
According to a local newspaper, the presentation was postponed because
the United States government was "nervous." It stated that additional
time was needed to review the final draft since the session would be at
the same time as a World Trade Organization meeting. (Source: *La
Jornada*, 6/23/04)

THE UNITED STATES IS WORRIED ABOUT CORN CONTAMINATION IN MEXICO

According to a local newspaper, the U.S. government (USG) announced a
report on the contamination of Oaxaca's native corn cultivations with
transgenic corn will be published, as soon as the USG's comments are
ready, although it expressed its concerns about the document's content.
This declaration comes after protests yesterday in the public meeting of
the eleventh regular session of the Council of Ministries of the North
American Commission for Environmental Cooperation (CEC). The meeting
concluded without the ministers from the United States, Canada and
Mexico making an official combined announcement on the transgenic corn
issue. (Source: *La Jornada*, 6/24/04)

**THE MINISTRY OF AGRICULTURE ANNOUNCES A SUPPORT PROGRAM FOR YELLOW
CORN**

On June 18, 2004, the Secretariat of Agriculture, Livestock, Rural
Development Fisheries and Food Stuffs (SAGARPA) announced in the *Diario
Oficial* (Mexico's Federal Register) the specific guidelines for the
support program of forward contract purchases of yellow corn and sorghum
(see MX4033 and MX3028). The support will apply only for the 2004
spring/summer crop (harvested in fall/winter 2004/05). The total volume
subsidized will be 900,000 MT for the spring/summer 2004 crop cycle. It
is relevant to note, however, that SAGARPA does not specify the
breakdown of the total volume of support for each grain. For the
spring/summer 2004 crop cycle, official estimates indicate that Mexico
will produce approximately 16.6 MMT of corn and 4.1 MMT of sorghum.
According to livestock and animal feed industry sources, they should
participate in this forward contract purchase program in order to be
eligible for the allocations of over-quota of imported corn under NAFTA.
Traditionally the GOM has issued import permits above the NAFTA corn
tariff rate quotas (TRQ). The minimum TRQ for U.S. corn under NAFTA is
3.360 MMT in 2004. (Source: *Diario Oficial*, 6/18/04)

# MEXICO STUDIES OPENING THE BORDER TO TRANSGENIC PRODUCTS

According to the Secretary of Environmental and Natural Resources
(SEMARNAT), Alberto Cardenas, Mexico should look for a "gradual opening
to biotechnology and transgenic products, because up to now there has
not been any study that demonstrates genetically modified organisms are
harmful to people." Also, he stated that the introgression of transgenic
corn into native varieties in Oaxaca, "is a fact that we have never
denied," but noted that no such introgression had been detected in the
states of Jalisco and Puebla. Cardenas pointed out the possibility of
creating \"protection areas\" for more than 50 Mexican corn varieties in
order to avoid introgression. He insisted that it is necessary to have a
framework law regulating biotechnology and \"to transform corn
cultivation into an emporium in the country in which the grain
originated.\" (Source: *La Jornada*, 6/28/04)

# INDIGENOUS GROUPS REJECT TRANSGENICS

According to a local newspaper, the Mexican Secretary of Environment,
Alberto Cardenas, the U.S. Administrator of the Environmental Protection
Agency, Michael Levitt, and Canada's Under Secretary of Environment,
Norine Smith, faced the claims of Oaxaca, Puebla and Tlaxcala indigenous
groups. These groups argued that they have been adversely affected
because of the contamination of their native corn with pollen of
transgenic corn. Moreover, they claimed the report on the impact of
genetically modified organisms on native corn has to be released, as
soon as possible, in order to protect the country through a moratorium
on transgenic products. The demonstration was held during the eleventh
regular session of the Council of Ministries of the North American
Commission for Environmental Cooperation (CEC). (Source: *El Universal*,
6/23/04)

# DID NAFTA ENHANCE EMPLOYMENT OPPORTUNITIES?

In the ten years since NAFTA was signed, employment opportunities in the
United States, Mexico and Canada have been precarious. Besides the
unsteadiness of earnings, workers from the three countries have lost
benefits as well as quality of life standards. An analysis regarding the
employment situation, conducted by Alberto Arroyo and collaborators,
revealed that during NAFTA, unemployment skyrocketed dramatically within
the three countries. Also, the report indicates that economically active
women were the most affected social sector due to "cuts" in the number
of permanent employment, while the informal economy, unstable and
temporal employments increased remarkably. (Source: *La Jornada*,
6/28/04)

**THE FINANCE SECRETARIAT INCREASES MEXICO'S ECONOMIC GROWTH FORECAST**

The GOM raised its forecast for economic growth this year as rising U.S.
demand boosts the nation\'s exports of goods ranging from raw metals to
electronics. The government expects the economy to expand 4 percent this
year, up from a previous forecast of 3-3.5 percent, and after growing
1.3 percent in 2003. \"This is related to what is happening in the
United States,\" Finance Secretary Francisco Gil Díaz told members of
the American Chamber of Commerce in Mexico City. He further stated that,
"The Mexican \"economy is growing broadly, without a concentration in a
single branch of activity.\" Mexican exports rose 21 percent in May from
the same period a year earlier, helping the country post a US\$57
million trade surplus, its first since February 2003. The ninth
consecutive rise in exports is in turn encouraging factory managers to
invest in new equipment and boost payrolls, extending growth to the
domestic economy, according to Alfredo Thorne, an economist with J.P.
Morgan Chase & Co. in Mexico City. Ford, the world\'s second largest
automaker, says its Mexican sales may grow 9 percent this year, assuming
total Mexican automobile sales will rise at the same rate to a record
high 1.08 million units, said Marcos de Oliveira, President of Ford
Motor Company\'s Mexican unit. (Source: *El Financiero, El Universal*
and *La Jornada*, 6/24/04)

REPORTS RECENTLY SUBMITTED BY FAS/MEXICO CITY

+-------+----------------------------------------------------+--------+
| # N   | # TITLE                                            | # DATE |
| UMBER |                                                    |        |
+-------+----------------------------------------------------+--------+
| M     | Weekly Highlights & Hot Bites, Issue #24           | 6      |
| X4079 |                                                    | /22/04 |
+-------+----------------------------------------------------+--------+
| M     | Status on Avian Influenza #3                       | 6      |
| X4080 |                                                    | /25/04 |
+-------+----------------------------------------------------+--------+

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