Brazil’s proposal to exchange Uruguay’s beef quota in China for Brazil’s share of the Mercosur quota with the European Union drew a critical response from Uruguay’s meatpacking industry. Two industry sources consulted by WBR questioned both the logic behind the swap and the practical feasibility of the operation.
“It seems absurd. Who would think of exchanging 100,000 tons for 7,000?” one of the sources said, referring to the asymmetry between the volumes involved. The portion Brazil would transfer would be the chilled beef quota, estimated at around 7,000 tons.
Beyond the numbers, however, the industry source said the underlying problem “is something else”: the lack of import licenses on the European side. “It is a quota that requires a license on the other side. That is what is holding up the entire agreement with the EU. The licenses are not appearing. Even if you were allocated 20,000 tons, you still need to have the counterpart. Without that, there is no match,” the same source warned, dismissing the possibility that this was a technical or IT-related issue.
“In my view, it is deliberate. They release licenses for 7, 10 or 30 tons at a time, and by failing to distribute the quota, we in Mercosur played into their hands,” the source said.
The second source, who has a more technical background, pointed to the risks of setting a precedent in the trade relationship with China. “It is not simply that I am not enthusiastic about it. These are discussions taking place at the political level without a proper analysis,” the source said.
The main concern is the difficulty of reversing an administrative decision adopted by China within the framework of a tripartite agreement. “If tomorrow they adopt an administrative measure based on this precedent, then a precedent is being created. I think this should be negotiated at another level, as part of something broader,” the source said.
The informant recalled how difficult it can sometimes be to reverse the suspension of a plant in China because of the difficulty in finding the appropriate counterpart within the Chinese administration.
The source said that, should an opportunity arise at some point to use surplus quotas between countries, it should be framed within the criteria governing the administration of the overall quota rather than handled as a one-off initiative.
