In a surprising move, the government of Mexico published a decree in the June 8, 2016 edition of its Official Gazette establishing a duty-free tariff rate quota (TRQ) for imported beef and live cattle. The beef TRQ covers both chilled and frozen beef cuts, bone-in and boneless, as well as carcasses. A quantity limit was not included in the notice. Prior to this announcement, import duties were 20 percent for chilled beef and 25 percent for frozen. Imports from the U.S. and Canada are duty-free through NAFTA.
The stated reason for the elimination of import duties is to address scarcity of beef in the market. From that standpoint, the timing of the decree is curious because U.S. beef prices have fallen and supplies are increasing, while Mexico’s herd has reportedly also been rebuilding following the drought in 2011-2012.
Because all beef imports still must comply with Mexico’s sanitary requirements and originate from approved plants, the TRQ is unlikely to generate significant imports in the near term from suppliers not currently serving the market. The U.S. is Mexico’s main beef supplier with 84 percent market share, while Canada supplies 9 percent and Nicaragua 5 percent. Mexico also reports imports this year from Australia, New Zealand, Chile, Costa Rica, Panama and Uruguay.