Under plans known as unilateral tariff rate quotas (TRQs), Mexico will allow in 200,000 tonnes (t) of duty-free beef from exporting countries until 31 December 2017.
Only Canada and the US are currently able to trade duty free with Mexico, in accordance with the North American Free Trade Agreement (NAFTA). However, the latest announcement, originally proposed by Mexico’s government in June 2016, could be a window of opportunity for global beef traders.
One such country salivating at the prospect of tariff-free trade with Mexico is beef behemoth Australia.
Historical exports poor
In the words of Meat & Livestock Australia (MLA), the country’s beef exports to Mexico have been “negligible for a significant period of time”. Export volumes peaked in 2001, with over 6,100t shipped weight (swt) product.
Last year, exports hit a paltry 96t swt. Bovine offal has performed marginally better over the last decade, surpassing 1,000 tonnes swt in 2016.
MLA is unclear about whether beef offal will be subject to the tariff-free trade and the Mexican government has given no indication either.
However, Australia is likely to face tough competition for tax-free beef exporters to Mexico and any exporter will need to be approved for exports by Mexico.
Trade value to Mexico under a duty-free quota could still see Australian beef exports restricted by currency fluctuations between the Australian dollar and the highly devalued Mexican peso.
But with the increasingly protectionist rhetoric from the Trump administration, Steiner Consulting Group suggested Mexico would be looking to diversify its beef supply to mitigate trade disruptions with the US.
Business Monitor International also claimed Trump appeared adamant to implement protection trade measures, including heavy duties on agricultural products, with Mexico.
As such, Australia and other global beef exports could see a big opportunity to expand in Mexico, a market with 122 million consumers.