Mexico bans poultry from US states on health fears [and from NAFTA fears]

(Note: ALL CHICKEN PRODUCTS from California, Connecticut, Maine, North Carolina, Pennsylvania, Texas, Virginia, and West Virginia are now BANNED from import to Mexico.)

January 21, 2003

By John Authers

To submit a Letter to the Editor: letters.editor@ft.com

Mexico City, Mexico - Mexico has banned imports of poultry from eight US states on health and safety grounds, as continued unrest over the North Atlantic Free Trade Agreement prompted the country's main farmers' union to threaten a national strike at the beginning of next month.

Under NAFTA, signed in 1992, all tariffs on a range of agricultural products, including poultry and pork, were to be eliminated at the beginning of this year.

However, Mexican poultry producers complain that the market could be flooded by US chicken legs and wings, and that they have not received subsidies from the government to compete.

There are widespread calls for the government to renegotiate NAFTA.

The agriculture department's ban on all poultry imports -- which covers all chicken products from Texas, California, Maine, Connecticut, Virginia, Pennsylvania, North Carolina and West Virginia, is officially for health reasons, and follows an outbreak of Newcastle virus in those states.

However, by banning imports from some of the largest US poultry-producing states, the government has secured a breathing space while it tries to deal with demands from farmers' groups.

The National Farmers' Confederation said on Tuesday it was calling a "national strike" for February 5.

The organisation, one of the largest covering farm workers in the country, said its day of action would involve blockades of all main highways, ports and border crossings.

The developments follow the end of a 20-day truce between farmers' groups and the government, agreed at the turn of the year, in which the two sides have been discussing possible extra aid for the farm sector.

Possible compromises involve using emergency provisions in NAFTA to delay the removal of taxes. US poultry producers, which employ Mexican workers on both sides of the border, already have a large share of the Mexican market, and have suggested such a compromise to avert the risk of a backlash against their Mexican subsidiaries.

This could delay removing the 49 per cent tariffs on chicken parts for three to five years.

Mid-term congressional elections are due in July, and analysts said opposition politicians -- particularly in the former governing Institutional Revolutionary Party (PRI) which has strong links with farm groups -- were using the issue to attack the government.

The government appears divided. The new foreign secretary, Luis Ernesto Derbez, said this month that "what needs to be corrected" in NAFTA would be corrected.

Santiago Creel, interior minister, has also said he is open to renegotiation, but Fernando Canales, the new economy secretary -- a position that holds responsibility for trade talks -- ruled out renegotiation.

President Vicente Fox has said renegotiation is possible but he has warned that it could leave Mexico worse off.

Copyright 2003 The Financial Times Limited Financial Times (London)

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