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In midst of politically-charged climate, NA Free Trade Agreement inches closer.

Bringing Mexico into the proposed North American Free Trade Agreement (NAFTA) will mean an estimated $2 billion annual increase in US farm exports to customers south of the border, according to the USDA. This would happen as duty-free privileges for about 65% of traded foodstuffs -- to be phased in over a five-year period -- will make American meat commodities more competitive.

US producers sold almost $192 million worth of frozen beef, turkey, chicken and offal in Mexico during 1991, paying tariffs averaging 10%. During the same period, Mexican companies supplied frozen shrimp, orange juice and broccoli worth $173.6 million to American buyers.

Shipments of value added frozen foods to Mexico are negligible, since at-home consumption of such products remains scant. However, a growing foodservice industry is demanding more QFF items -- especially among the hotel and resort sectors that cater to foreign tourists.

If ratified by the governments of the United States, Mexico and Canada, the NAFTA would create the largest duty-free market in the world, boasting more than $6 trillion in annual output and encompassing over 360 million people.

A number of US frozen vegetable concerns have already established themselves in Mexico. Some value added producers have set up offices and are thinking about building factories to take advantage of low labor rates and develop a base from which to penetrate the 80-million-person domestic market.

But the politically-charged NAFTA has a long way to go before it obtains Congressional approval in Washington. Senator Patrick Leahy of Vermont, chairman of the Agriculture Committee, noted that "a recession is not the time to be thinking about signing a free trade agreement that could export jobs south of the border."

Meanwhile, traditional suppliers to the North American market from outside NAFTA boundaries could stand to lose a good deal of business if the pact takes effect. Brazilian exporters of frozen concentrated orange juice, for example, would face a disadvantage since they must pay US Customs duties amounting to $492 a ton. This will certainly give Mexican producers an attractive incentive to increase orange juice output at Brazil's expense.
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Publication:Quick Frozen Foods International
Date:Oct 1, 1992
Words:345
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