U.S./MEXICO ACCORD WORKING GROUP

MARCH-JULY, 2000 ACTION PLAN

I. MEAT TRADE

1) Electronic inspection documents: The proposal to implement a pilot test of electronic inspection document transmission between packing plants in the U.S. and Mexico and the relevant border authorities has received indications of general support from industry and from federal officials on both sides. The work ahead breaks into two phases B getting all of the government agencies and interested industry groups to agree on how the system should operate, and then carrying out the software development and other technical tasks required to design and test an operable system.

Working Group challenge - Help identify possible funding sources for this project, and weigh in to encourage support from those which appear to be most likely to back the effort

2) Mexican anti-dumping action against U.S. beef and variety meats: A final ruling is due from SECOFI (the Mexican commerce secretariat) in March, though SECOFI has been known to miss procedural deadlines. Almost any outcome is likely to increase strain between the U.S. and Mexican cattle and meat industries, since one or both sides will almost certainly see the ruling as unjust from their own perspective. the degree of trust we have been able to build with Mexican state agricultural leaders through the Accord mechanism may offer an avenue to get bilateral relations back on an even keel.

Working Group challenge - We should be prepared to take an active role in assessing the damages after the SECOFI ruling and suggesting to the interested parties how this sort of expensive legal conflict can be avoided in the future.

II. GRAIN TRADE

1) Mexican coarse grain quality complaints: This is a longstanding issue, and one which certain Mexican industry groups may be using to try to leverage a move towards grain purchase contracts that transfer as much risk as possible from the buyer to the seller. Nevertheless, there may be aspects of the current grain movement logistics and quality grading which need attention. A proposal for USDA to carry out a detailed study of grain quality in transit has been floating around since last November, and I made a personal effort to get GIPSA and FAS to focus on this issue when I was in Washington Feb. 24-25. GIPSA has indicated willingness to organize a series of seminars and monitoring studies related to U.S./Mexico grain trade. This effort would add a factual element to the discussion, and possibly point toward areas where better handling could improve the quality received by our customers.

Working Group challenge - Actively support USDA funding and execution of this effort and participate in a review of results with our Mexican counterparts

2) Direct producer-to-consumer trading relationships: At the Guadalajara meeting, a leader of one of the national feed milling associations pointed out that direct sales from producers (i.e. coops) to end-users has been discussed on many occasions, including recent exchanges with trade teams and officials from Illinois, Iowa, and Nebraska (all represented at the meeting) with no noticeable results. It was agreed that future exchanges on this subject need to focus on actual experiences of those who have attempted direct sales and those who have attempted direct purchases. The U.S. Grains Council is now recruiting U.S. grain companies to participate in a major AMeet Your Supplier@ conference in late June. This meeting would provide an appropriate venue for a follow-up meeting to the Guadalajara discussion.

Working Group challenge - Promote participation in the AMeet Your Supplier@ conference by small and mid-sized grain companies and cooperatives, at the same time developing a clear idea within our Working GroupBbased on detailed discussions between our marketing personnel and grain companies in our statesBof what would need to change in order for those companies to enjoy direct trading relationships with Mexican customers characterized by manageable risks and reasonable profit margins. If we are not working from a clear conception of what U.S. suppliers might gain from an ongoing exchange with Mexican customers on grain trade issues, this effort will quickly run out of steam. The Mexicans know what they want, and believe that previous exchanges of this sort have been almost a waste of time.

III. HORTICULTURAL CROP MARKETING

Mexican state officials continue to express interest in studying barriers to direct cooperation between producer organizations which are supplying the same markets. Both sides acknowledge that, particularly in the case of perishables which move through consignment auctions, producers= incomes can be severely harmed by short-term oversupply situations. However, only in a few cases are there available mechanisms to avoid these problems, in part because anti-trust/anti-monopoly rules severely constrain direct efforts by producer groups to work on market supply/pricing issues.

Working Group challenge - Identify three or four state staff members who could undertake a study of the legal barriers to greater cooperation under both countries= laws and regulations, and develop specific recommendations which could be considered by our Working Group to be included in NASDA and AMSDA legislative packages in their respective capitals. These staff members would have to be available to make one trip to Washington and one to Mexico City within the next two months, and to spend a modest amount of office time helping produce a draft report and recommendations for discussion at the Accord meeting in July.