Mexico is looking at Brazil and Argentina as an alternative for US corn while Mercosur talks with EFTA are advancing

In a response to Trump's trade policy, Mexican Agriculture Secretary said last Thursday he will lead a business delegation to Argentina and Brazil to explore buying yellow corn, part of a drive to lessen Mexico's U.S. dependence.

The trip will happen within the next 20 days, Agriculture Secretary José Calzada said, adding that the government could explore quotas and changing the tariff regime for imports from South America if needed.

On Sunday the Mexican senator Armando Rios Piter, who leads a congressional committee on foreign relations, says he would introduce a bill this week, to shift corn import demand to Brazil and Argentina instead of the United States.

“I'm going to send a bill for the corn that we are buying in the Midwest and...change to Brazil or Argentina,” Rios Piter told CNN.

On Wednesday Marisa Bircher, Argentina's Secretary of Agro-Industrial markets, said that the country hopes to increase exports to Mexico. Argentina exported less than 100,000 tons of corn to Mexico last year.

“Corn is obviously a sector that is on the list to have greater access and gain a bit more space for Argentina, regardless of the presence of the US market,” Ms. Bircher said.

Ms. Bircher said there was also potential for poultry and beef exports to Mexico.

Mexico last year imported 13 million tons of yellow corn, of which 12.75 million tons were provided by US farmers with a bill of US$ 2.3bn.

EFTA/Mercosur talks: confirmed to begin next June

The first round of formal trade negotiations between Mercosur and EFTA, European Free Trade Association, is scheduled to take place in Buenos Aires next June according to information from Brussels where there was a preliminary encounter between the two sides. “It will be in June, and talks will be at chief negotiators level”, confirmed EFTA and Mercosur sources.

The Brussels meeting was headed by Argentine ambassador Guillermo Daniel Raimondi, in representation of Mercosur and Norway's Sveinung Roren for EFTA, which is made up of Iceland, Liechtenstein, Norway and Switzerland, none of them EU members.

“It was also agreed a second meeting in August and the necessary exchange of information, such as nomenclature, stats, trade legislation and policies”, added Mercosur sources. Bilateral trade between the two blocks reached 8.7bn in 2015 when the first contacts were started. Last January in Davos Economic Forum the round of discussions was first agreed.

EFTA exported mostly pharmaceutical products (US$ 1.4bn); organic chemicals (US$ 764m), and machinery (US$ 462m), while Mercosur countries shipped US$ 1.9 bn in precious stones and metals; US$ 859m in inorganic chemical products; US$ 357 in food and US$ 259m in coffee, tea and species.

“We are optimistic about this coming round, which is part of the opening of Mercosur to the world”, said the South American source, which last week was also involved in negotiations with the EU-28 ahead of the Buenos Aires round in March.

“The purpose of this trip and technical talks to Brussels was precisely to get ready for Buenos Aires and concentrate in the chapters of government procurement, market access, animal and plant sanitary measures plus services and investments”, added the source.

European Commission sources indicated that negotiations agreed “to intensify the technical work” in anticipation of Buenos Aires but also working on a tentative timetable of reaching an agreement at the end of the year. This last leg of EU/Mercosur negotiations took off in 2010, following several years of suspension.

Sources: Agência Brasil, Mercopress Agency

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Brazil and Argentina agree to move closer to Mexico and Pacific Alliance

Photo: Presidência da República / Beto Barata-PR

In a State Visit to Brasília, Argentinian President Mauricio Macri said that Mercosur would focus on strengthening its relationship with Mexico, Latin America's second-largest economy after Brazil. In his turn, the President of Brazil, Michel Temer, called for also building ties with the Pacific Alliance, a trade bloc including Chile, Colombia, Mexico and Peru. “We discussed the ever greater integration of Latin America, especially of South America and Mexico,” Temer said.

A response to Trump’s Trade Policy to Latin America

The leaders of Brazil and Argentina said on Tuesday they would pursue closer ties with Mexico and other Latin American nations alarmed by U.S. President Donald Trump's promises to tear apart trade deals and build a wall in the Mexican border to protect American jobs.

Trump has abandoned the Trans-Pacific Partnership deal that aimed to bolster trade between twelve Pacific Rim nations, including Mexico, Chile and Peru. In his campaign to keep manufacturing jobs in the United States, Trump has also threatened to slap higher taxes on U.S. companies opening new plants abroad and promised to rework the North American Free Trade Agreement with Canada and Mexico.

Tensions are running particularly high with Mexico after Trump ordered the construction of a wall along its 3,200-km border with the United States to stop illegal immigration.

Those moves were hailed by Macri, who came to power in 2015 on a business-friendly program, and his Brazilian counterpart Michel Temer as an opportunity to deepen trade ties within Latin America, long overshadowed by Washington's economic might.

“This change in scenario will make Mexico turn to the South with more conviction,” Macri said in a statement, after inking a series of small deals with Temer, a centrist who assumed the presidency last year after the impeachment of Dilma Rousseff.

Macri said he spoke with Mexican President Enrique Peña Nieto on Monday to discuss deepening cooperation between Mexico and Mercosur and wished him good luck in his dealings with the United States.

A window of opportunity: open to trade

Both Macri and Temer are seeking to open their countries - for decades considered among the most closed economies in the Western Hemisphere - in an effort to revive activity after years of recession. Some local trade experts say a potential rift between the United States and Mexico could open up space for Latin American nations. Mexico is a huge importer of agricultural products and its car industry could complement that of Brazil.

Since 2015, Brazil, a major exporter of corn and soy, has been in bilateral negotiations with Mexico to increase commercial ties under a regional trade agreement. The trade flow between Latin America's biggest economies has dropped nearly 10% between 2012 and 2016 to US$7.3 billion, roughly the size of commerce between Brazil and the much-smaller Chile.

Both Macri and Temer also hope that the Mercosur can take advantage of the apparent change in the U.S. trade posture to close a free trade deal with the European Union in talks that have dragged on for more than a decade.

Tensions over market access, however, continue to dog the regional trade bloc. Although Buenos Aires is willing to discuss the entry of Brazilian sugar into its market, its move to increase tax benefits to local auto parts manufacturers has infuriated Brazilian rivals.

In an interview with Brazilian newspapers published on Tuesday, Macri complained about his country's US$4.3 billion trade deficit with Brazil.

Multilateralism in Mercosur

Mercosur will be headed by Argentina in the first half of this year and by Brazil in the second. During this period, the goal of the two countries is to bring the bloc closer together and its expand diplomatic ties with other regions of the world. “It's time to expand trade, expand investment, and opportunities for Argentinians and Brazilians, since there are no taboos in Brazil-Argentina relations at the present moment,” Temer said in his speech, which was delivered before the traditional lunch with heads of state.

The Brazilian president noted that the partnership is all the more important if one bears in mind the context of “uncertainties in the international scenario.” “During a time when trends of disunity, isolation, and protectionism have gained momentum, Argentina and Brazil react with a better rapport, more dialog, more trade,” Temer stated, referring to the protectionist policy fostered by US President Donald Trump.

Sources: Mercopress Agency, Agência Brasil

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