With the exit of the United Kingdom — the Brexit — the chess table of exports changes for several products
Warehouse with sugar in the port of Santos — Foto: Julio Bittencourt/Valor
Brazil and the European Union (EU) have concluded a bilateral agreement on quotas for several agricultural products to adjust them after the United Kingdom’s exit from the European bloc, which has shrunk to 27 members from 28.
The quotas allow exporters to sell to the EU a certain volume paying a lower tariff. Under the agreement, the bloc will reduce quotas, but, in return, the UK will open others proportionally, thus preserving export opportunities for both markets.
Brazil has several specific quotas in the EU, including for sugar, chicken, beef, and turkey. The exporter gains more by using this space for its sales, with lower tax rates.
Valor has learned that a quota specifically intended for Brazilian sugar, currently at 388,120 tonnes, will be reduced to 341,550 tonnes, with the rest to be offered in another quota by the UK.
The EU has accepted to continue to comply with the reduction of the tariff to 11 euros per tonne in the first year, and to 11 euros/tonne and 54 euros/tonne in the second year for certain volumes of this Brazilian-only quota, as per commitments undertaken at the time of Croatia’s entry into the EU block.
In turn, a quota Brazil competes for with other sugar exporters will increase to 341,460 tonnes from 371,880 tonnes.
As for chicken meat (salted, processed, frozen), several specific quotas for Brazil will decline to 244,270 tonnes, down 27.9%. With this decrease in the EU, the quota in the UK will be much higher, reflecting more Brazilian sales of chicken in that market in recent years.
Also, the Brazilian quota for boneless beef, of 10,000 tonnes, will fall to 8,950 tonnes. The quota for frozen beef for all exporters, and not only Brazil, falls to 19,700 tonnes from 63,700 tonnes currently. With this sharp decrease, the EU has committed to compensate by reducing the tariff within this quota to 15% from 20%.
In turn, the quota for frozen turkey meat for Brazil falls to 2,860 tonnes from 3,110 tonnes. For prepared turkey meat, the quota also for Brazil alone, decreases slightly to 91,800 tonnes from 92,300 tonnes.
In other agricultural quotas, in which Brazil competes with other exporters, the division between the EU and the UK is also defined.
For corn, the overall EU quota goes to 276,400 tonnes from 278,000 tonnes. That is, almost the entire volume with a lower rate will remain with the community block.
In the case of plywood, the EU quota drops to 448,500 tonnes from 650,000 tonnes.
The quota for the entry of table grapes with a lower rate in the EU decreases to 885 tonnes from 1,500 tonnes.
As for the orange juice quota of 1,500 tonnes, it remains entirely for the EU. The other one, for fruit juices in general, decreases in the EU market to 6,550 tonnes from 7,040 tonnes.
In the negotiation, Brazil obtained a guarantee from the EU about the maintenance of exporters’ certificate of origin, so that the Brazilian government will be able to monitor who has access to the quotas and avoid irregularities in their use.
Having concluded the negotiations between Brazil and the EU, the Europeans now need internal authorization to sign the agreement, which can take months. In addition, its implementation should also take place with the implementation of quota agreements with the UK, so that there is no mismatch between the two and no harm to the exporter.
The negotiations between Brazil and the UK are well advanced on the volumes of agricultural quotas that London will open. It remains, however, to resolve issues such as the administration of quotas, for example. A new negotiation will take place on October 5.
*By Assis Moreira — Geneva
Source: Valor International