November 8, 2017 / 9:25 PM / a year ago

UPDATE 1-Brazil drops plan for tax-free wheat import quota -Argentina

(Adds information from Brazil’s foreign trade chamber; comment from source in the Brazilian government)

By Maximiliano Rizzi

BUENOS AIRES, Nov 8 (Reuters) - Brazil has abandoned plans to allow a 750,000 tonne quota to import tariff-free wheat from outside the South American trade bloc Mercosur, the Argentine government said.

The decision came after a series of negotiations between Brazil and Argentina, a major global wheat exporter which mostly ships to its neighbor Brazil, the ministry of agriculture said in a statement on Tuesday.

“Wheat is an emblematic product of bilateral trade and a pillar of regional integration,” Marisa Bircher, secretary of agriculture markets, said in the statement.

“Therefore, we must avoid adopting unilateral measures that benefit the entry of wheat from third markets.”

After Brazil’s wheat planting area fell almost 10 percent this year as a result of farmers giving preference to other crops, the government announced in October that it would seek to open a quota without tariffs, alarming the Argentine wheat sector which is expecting a record 2017/18 wheat crop.

The issue was expected to be evaluated by Brazil’s foreign trade chamber Camex, the body in charge to decide any alteration on items included in the Mercosur preferential terms, on Wednesday.

Camex said that the wheat quota proposal was taken out of the agenda for Wednesday’s meeting. It said it is unlikely to be discussed this year.

A Brazilian government source with knowledge of the negotiations with the neighboring country confirmed the information released by Argentina’s agriculture ministry. The source asked not to be named because it was not authorized to speak publicly about the theme.

Brazil’s agriculture and foreign relations ministries were not available for comment.

Brazil charges any wheat shipments coming from outside the Mercosur with a 10 percent levy.

In addition to Brazil and Argentina, the Mercosur bloc also includes Paraguay and Uruguay. (Additional reporting by Roberto Samora and Marcelo Teixeira, in Sao Paulo; Writing by Cassandra Garrison and Marcelo Teixeira Editing by Marguerita Choy)

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