Official malaise after Brazil's decision to give the United States a quota of wheat

Brazil's decision to allocate 750,000 tonnes of wheat to the United States without imposing tariffs has not been a good thing for the Argentine government, which will seek a solution within Mercosur.

In 2017, Brazil's industrial mills wanted to open a quota of 750,000 additional tons of mercosur. At the time, the Argentine government had avoided it after a diplomatic negotiation with the former Brazilian Minister of Agriculture, Blairo Maggi. Marisa Bircher, former Secretary for Agro – Industrial Markets and current Secretary for Foreign Trade, was at that time on the order of the former Minister of Agri – Food, Ricardo Buryaile, for negotiate an exit.

Yesterday, after reports in the Brazilian press in recent days, President Jair Bolsonaro proposed to his counterpart in the United States to use this tonnage as an annual quota, without customs duty. It should be recalled that Mercosur's supplementary wheat has to pay a tariff of 10%, which protects Argentina, Brazil's main wheat supplier.

At their first meeting, Bolsonaro and Macri discussed last January, among other issues of tariff adjustment, particularly in the service sector, but there was no definition of wheat.

"Whenever Brazil has hinted that it was possible to buy wheat outside of Mercosur, Argentina has opposed it," said Luis Miguel Etchevehere, secretary of the Agroindustria Government of the Nación.

According to the manager, "faced with the fait accompli, we will evaluate the tools expected from Mercosur to badyze the way forward."

In this context, in the words of Etchevehere, Argentina will indicate a solution for the US contingent. as part of Mercosur.

For its part, a source from the Foreign Ministry said that "Argentina follows with particular attention the announcement of the Brazilian government that refers to the reopening of a contingent with 0% of right customs duty for 750 000 tonnes of wheat outside the Common External Tariff of Mercosur (AEC) of 10% ".

He added that "the Argentine government has begun discussions with the Brazilian authorities and other Mercosur partners in order to badyze the impact and consequences that this measure could have on bilateral trade".

Recently, Brazil has stopped the entry of pears and Argentine apples after detecting the presence of the pest Carpocapsa, which affects the quality of the fruit. After a negotiation between Agroindustria and Senasa with the Brazilian health authorities, the neighboring country lifted the measure in one week.

This is striking in Brazil's decision to grant a quota of wheat to the United States. it is not related to any supply problems on the part of Argentina, as it has on other occasions when the previous government limited exports. Strictly speaking, this seems to be a political problem. In exchange for wheat, the United States will send a health mission to Brazil to conduct inspections so that Brazil can resume its meat exports, suspended since 2017 after the case of adulterated meat in the neighboring country.

Last year, Brazil increased wheat imports by 16.9 percent to 7.04 million tons. Argentina placed some 5.94 million tonnes and covered 84.4% of Brazil's purchases. Second and third places were occupied by Paraguay and the United States, with shipments of 339,844 tonnes (4.8%) and 273,631 tonnes (3.9%), respectively.

According to a Zeni report, US wheat exports to Brazil have fallen "remarkably recently". On a peak sales of 3.48 million tonnes in 2013, when Argentina was limited to export, the volume had risen to 1.23 million tonnes in 2016 and 340,088 tonnes in 2017 At the same time, they were 273,631 tonnes in 2018.