Key Topic – Mexico Grants Duty-free Access for Imported Beef

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 had to comply with Mexico’s sanitary requirements and originate from approved plants, the TRQ did not generate significant imports from suppliers not currently serving the market. The U.S. is Mexico’s main beef supplier with 85 percent market share, while Canada supplies 9 percent and Nicaragua 5 percent. Mexico also reported 2016 imports from Australia, New Zealand, Chile, Costa Rica, Panama and Uruguay.

UPDATE: In early March 2017, Mexico has issued a similar announcement for the remainder of the 2017 calendar year. While this reiterates Mexico’s desire to attract new beef suppliers to the market, it remains to be seen if this effort will be successful.