Central America Free Trade Agreement (CAFTA)

The United States (U.S.) has concluded a Free Trade Agreement with four Central America Countries (El Salvador, Guatemala, Honduras, and Nicaragua) after negotiations began last January. Costa Rica indicated that they needed to under take further consultations at their capital before consultations can continue. Some of the disagreements Costa Rica had with the U.S. concerned pork tariffs, telecommunications and insurance. Negotiations will continue with Costa Rica in January, 2004 and the U.S. will also start negotiations with the Dominican Republic early next year and try to bring them into CAFTA before Congress acts on the agreement.

CAFTA countries already enjoy duty free excess to the U.S. for a majority of their products through trade preference programs, except for textiles and sugar. Under CAFTA, it would take up to 18 years for tariffs on U.S. poultry exports to disappear. The long time frame is because negotiators wanted to protect the U.S. sugar market from Central American imports.

Some observers have noted further work needs to be done to ensure these countries recognize the U.S. meat inspection system and implement transparent import procedures. With an election year on the horizon, concerns are being expressed from Congressmen about labor issues, textiles and increased sugar imports in response to this agreement. The CAFTA draft text will be released in January, 2004.

Source: Various News Sources

Mexico – A Turkey Emphasis

The Mexican poultry industry is anticipating to export poultry to the U.S. in 2004. The U.S. Embassy had indicated to Mexican producers that by December 15, 2003 the USDA will send a team to visit and inspect poultry plants in Yucatan and Jalisco. If the plants are approved, the slaughter system in Mexico will be equivalent to the one in the United States. Some are also anticipating three poultry processing plants to be authorized to export to the U.S. during the first half of 2004. The plants, located in Yucatan, Neuvo Leon, La Laguna and Chihuahua, are expected to receive the same recognition status the USDA gave Sonora and Sinaloa in 2000 for being free of phytosanitary poultry diseases.

The USDA has recognized Sonora and Sinaloa as free of avian diseases. Increased interest is being noted by some turkey processors in Mexico located in approved export areas to the U.S. The best possibilities being considered are the Latin population with good purchasing power and who knows the Mexican brands. The exportation would depend on the validation process of the Mexican slaughtering system USDA will conduct in December 2003. The population has demonstrated growing tendencies towards fresh poultry. The increased interest in exporting to the U.S. has led turkey and other poultry producers to consider establishing a common market with trans-border investments in the next few years.

The increased interest from Mexican turkey producers in exporting to the U.S. comes at a time when per capita consumption in Mexico has dropped 2 kg. Even though Mexico expects it’s self to consume 172,000 metric tons (MT) of turkey in 2003 out of which 13,163 MT will be supplied by domestic production, there is an over supply of product. Some of the over supply has come from productivity improvements this year.

Producer organizations in both the U.S. and Mexico, meanwhile, are exploring possibilities of uniting for export purposes in order to become more effective exporters and to face challenges together that other countries present, for example Brazil.

Source: USDA/FAS and various other news sources.

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Source: USDA's Agricultural Marketing Service - 23rd December 2003.