Bad news for Argentine wheat: Brazil grants free quota to US

Presidents of the USA, Donald Trumpand Brazil, Jair Bolsonaro, formalized in Washington a alliance which promises to mark continental politics, with a fervent condemnation of socialism and several agreements that could Bring Brazil closer to multilateral organizationslike the OECD and NATO.

But the meeting also had its economic profile, with a understanding of bilateral trade between the two American giants, which also brings consequences for Argentina.

During the meeting, Brazil also promised to allow the entry without rates of 750,000 tons of US wheat a year and negotiate the terms of import of American pork.

Argentina is the main supplier wheat from Brazil: it exports some six million tons of the cereal a year.

The agreement between the United States and Brazil for a sales volume equivalent to 10% of requirements imports of Brazilian cereals, immediately produced lowering the price of Argentine wheat, about 4 dollars per ton

Brazil will set up an annual quota of 750 000 tonnes Royalty-free for American wheat. The announcement has not yet been formalized by the Brazilian government authorities, but it is believed that it will be implemented. in exchange for a reopening of meat exports Brazilian cattle in the United States.

There are precedents in this regard. In the middle of 2014 Brazil temporarily suspended the common external tariff 10% for imports of wheat from non-Mercosur countries when Argentina did not have more exportable balance of the cereal.

Also in 2016 the Minister of Agriculture of Brazil, Blairo Maggi, has attempted to negotiate with his Argentine pair a Annual quota of 750,000 tonnes of US wheat and Canada duty-freebut the attempt he did not prosper politically.

Analysts believe that this unilateral measure of Brazil, without consulting its regional bloc partners, paves the way for the definitive disappearance of the tariff advantage Mercosur because it affects not only the Argentina, if not Paraguay and Uruguaywho also produce and export wheat.