Mexico says hola to trade delegation

Mexico is forecast to be among the world's top 10 economies by 2030 and presents significant opportunities for increased Australian red meat exports.

Its potential saw MLA International Business Manager - North America, Rob Williams, accompany Australian Trade Minister, Steven Ciobo, to Mexico in early October as part of an Australian trade delegation. The business-facing visit was designed to foster relationships with this important Latin American economy. 

Click to view larger image: Australian meat and wine delegation, including MLA’s Rob Williams, with local Austrade staff in Mexico.

With a population of 128 million people, Mexico is the largest Spanish speaking nation in the world. It has a young demographic (the average age is just 28 years), strong GDP per capita, and represents a significant market for the future.

In February 2017, Mexico announced a temporary tariff elimination on beef under a 200,000 tonne quota, opening up the opportunity for Australia to supply the market on a more competitive basis.

There is significant interest in sourcing Australian beef products in Mexico. Traditionally, for Australian suppliers, the market has been a low-priced commodity trade market dealing in frozen beef cuts such as flanks and beef lips.

In 2016, Australian beef exports to Mexico totalled 96 tonnes shipped weight (swt), while beef offal exports reached 1,026 tonnes swt.

However, there are potential opportunities for premium chilled grassfed beef amongst the foodservice sector, targeting consumers in higher income brackets, as an alternative to US grainfed prime cuts.

Mexico also has a strong potential for Australian sheepmeat, however some non-tariff trade barriers are restricting ability to supply.

Click to view larger image: MLA’s North America International Business Manager Rob Williams with Australian meat exporters as part of a recent trade delegation to Mexico.

Currently, Mexico is renegotiating the North American Free Trade Agreement (NAFTA) with both the US and Canada. NAFTA renegotiations will conclude in the first quarter of 2018 and the US has clearly stated that if Mexico does not accept changes that fix the trade imbalance then the US will withdraw from NAFTA.

While it is difficult to speculate on the likelihood of a US withdrawal from NAFTA, if the US does leave NAFTA, then this represents a key opportunity for Australian beef exporters, as it will level the playing field on market access.

In addition, Australia, together with three other nations, has become an associate member of the Pacific Alliance (a free trade agreement covering Mexico, Chile, Columbia and Peru). Should we be successful in negotiating access to the Pacific Alliance, then again opportunities will arise for market access to Mexico.