June 8, 2018 / 4:14 AM / in 4 months

U.S. can sell pork to Mexico through import quota, despite tariffs: Mexico

MEXICO CITY/DES MOINES, Iowa (Reuters) - U.S. producers can sell pork legs and shoulders to Mexico via an import quota despite retaliatory measures taken this week after U.S. President Donald Trump imposed tariffs on steel and aluminum, the Mexican government said on Thursday.

FILE PHOTO: Piglets are pictured in a production module at the pig farm Granjas Carrol de Mexico (GCM), in Cuyoaco, Puebla state, Mexico August 4, 2017. Picture taken August 4, 2017. REUTERS/Edgard Garrido/File Photo

Mexico published a long list on Tuesday of U.S. products it would subject to tariffs, including the pork cuts. The measures were a response to U.S. tariffs on steel and aluminum imports from Mexico, Canada and the European Union.

But due to the country’s high consumption of pork legs and shoulders, Mexico created a quota for 350,000 tons that could be imported without tariffs. It was not previously clear that the quota would apply to imports from the United States.

The United States “will be able to take advantage of the quota because the quotas are not discriminatory,” the Mexican economy ministry wrote in response to a Reuters inquiry.

The temporary pass to the United States shows Mexico’s dependence on its neighbor to the north, said Adam Speck, commodity market analyst for U.S.-based Informa Economics. That 350,000-ton volume represents about four months of shipments, he said, giving officials from both countries more time to hammer out a deal to revise the North American Free Trade Agreement.

Over the past 10 years, U.S. pork made up 89 percent of Mexico’s imports of the meat, accounting for about a third of local consumption, according to the Mexican economy ministry.

One big category of pork: ham. The United States exported more than 466,000 metric tonnes of ham to Mexico in 2017 – worth $857.8 million and accounting for more than 80 percent of all U.S. hams exported that year, according to U.S. Department of Agriculture data.

Many of those hams are “bone-in” hams, where the labor to remove the bones costs less, according to industry analysts. After the meat is de-boned, the product is either consumed domestically in Mexico or re-exported to other markets, including the United States.

Mexican Economy Minister Ildefonso Guajardo said this week that Mexico expects to import pork cuts from Europe to compensate for the decline from the United States. The import quota will be in force until Dec. 31.

The economy ministry also clarified that there will be a transition period for the U.S. pork tariffs for any shipments outside of the quota. Starting on June 5, the tariff on U.S. pork was set at 10 percent, and it will be raised to 20 percent on July 5.

Reporting by Adriana Barrera and Ana Isabel Martinez in Mexico City, and Tom Polansek in Des Moines, Iowa; Additional reporting by P.J. Huffstutter and Theopolis Waters in Chicago; Editing by Frank Jack Daniel and Matthew Lewis

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