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USDA International Egg and Poultry


01 August 2012

USDA International Egg and Poultry: MercosurUSDA International Egg and Poultry: Mercosur

The 43rd Mercosur summit was recently held in Mendoza, Argentina in late June 2012. Another meeting is scheduled for the week of July 30, 2012 in Rio de Janeiro, Brazil.
USDA International Egg and Poultry

At the June meeting, Paraguay was suspended from Mercosur until the country’s next presidential election in 2013, however economic sanctions were not imposed on Paraguay. The suspension comes after Paraguay’s quick impeachment of President Fernando Lugo following the death of 17 people in a land eviction between police and landless peasants. Mercosur justified Paraguay’s suspension and the barring of the country’s replacement, Vice President Federico Franco, as retribution for Paraguay violating the Democratic Clause of the Ushuaia Protocol of July 24, 1998. The Union of South American Nations (UNASUR) also voted to suspend Paraguay’s membership until its presidential election in 2013.

In light of Paraguay’s suspension, Argentina, Brazil, and Uruguay opted to take advantage of the situation and announced its decision to make Venezuela a full member of Mercosur July 31, 2012. Venezuela applied to become a full member back in 2006 and had been approved by every country but Paraguay. Paraguay’s President Fernando Lugo was in favor of Venezuela’s inclusion; however Paraguay’s Congress has been against Venezuela’s inclusion into Mercosur the past 6 years. Many are questioning the legality of Mercosur’s decision to induct Venezuela as a full member without the official consent of suspended Paraguay.

As it stands, Venezuela is expected to sign the Accession Protocol to Mercosur at the July 31, 2012 meeting in Brazil. Venezuela would then have 4 years to adopt “in a gradual manner the rules and Common Foreign Customs (ACE)” of the regional block.

Argentina and Brazil stand to gain the most with Venezuela joining Mercosur. Venezuela holds the largest oil reserves in the world and is highly dependent on imports. Venezuela’s inclusion would remove trade barriers and create demand for Argentine and Brazilian products, especially agricultural products, as well as create regional integration, which is a big theme for Venezuela President Hugo Chavez.

Chinese Premier Wen Jiabao held a video conference the week of the summit to discuss China and Mercosur conducting a feasibility study of a free trade agreement (FTA) between the two. At the meeting, China and Mercosur pledged to further promote economic cooperation and trade to lift bilateral trade to USD $200 billion in 2016. China is Mercosur’s second largest trade partner and has recently visited Brazil, Uruguay, and Argentina. Mercosur has also been exploring FTA’s with the EU since 1995, South Korea (2004), and Canada (2011). Negotiations with the EU and Canada have struggled over agricultural subsidies.

Another topic at the Mercosur summit was a proposed increase on regional trade tariffs, which was rejected by the trade block. Argentina and Brazil proposed raising the Common External Tariff (CET) from 22% to 35%, which is the maximum allowed by the WTO (World Trade Organization) to curb an influx of cheap imports from China and Brazil. Instead countries will be allowed to decide individually on whether to change its CET.

Mercosur is a trade block that was formed in 1991 with the signing of the Treaty of Asuncion. The trade block is comprised of 4 full members (Argentina, Brazil, Paraguay, and Uruguay) and 6 associate members (Bolivia, Chile, Colombia, Ecuador, Peru, and Venezuela).

Argentina

In 2011, USDA Foreign Agricultural Service (FAS) ranked Argentina sixth in world chicken meat exports behind Brazil, US, EU, Thailand, and China. In chicken meat production, Argentina ranked eighth behind US, China, Brazil, EU, India, Mexico, and Russia. Due to heavy investments, favorable government policies, and increased domestic consumption and consumer preference Argentine poultry production and exports have grown significantly in the past decade. Another big contributor is its proximity to feed as Argentina is second in world exports of corn; Brazil is third. However Argentina, along with much of South America, suffered a drought this past growing season negatively affecting yields. Argentina’s last drought was in 2008-2009. This in combination with the current drought in much of the US is expected to create a shortage of grain and increase international prices.

Source: Various News Wires/USDA FAS



Total Mercosur Broiler Meat Exports by Member Country and Volume in thousand Metric Tons (TMT)
Note: All data is January-December except 2012*, which is January-February.
Source: AliceWeb Mercosul

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