Canada wants slice of the Brazilian wheat quota

Brazil plans to open a quota of 750,000 tons of wheat without import duty to countries outside of Mercosur in November, and Canada wants a slice of that quota. It is therefore preparing to question the details of the distribution of this quota in the World Trade Organization (WTO) Agriculture Committee.

In March, President Jair Bolsonaro announced the decision to set this Brazilian wheat quota. The volume that exceeds the established limit will be taxed at 10%. The United States is primarily interested in taking advantage of the quota, but Russia is another major producer interested in the Brazilian market.

Argentina, Paraguay, and Uruguay, which can already export at zero tariff to Brazil, will not benefit.

The following DataLiner graph shows Brazil’s top wheat import origins:

Source:DataLiner/Datamar

At first, the volume distribution will be on the basis of “first come, first served”. American producers want to conquer at least 70% of the total volume of 750,000 tons. Canadians and Russians will also enter the fray, and their share of this trade will depend on the prices at which they will want to export.

The quota is an old Brazilian commitment and the US had given a deadline until November for the country to implement it. It was agreed that Brazil would do this after Argentina’s presidential elections, so as not to cause difficulties for Mauricio Macri’s candidacy.

On the other hand, the United States has been signaling that, once the quota of wheat has been implemented, it will be able to lift the embargo on Brazilian fresh beef, which has lasted two years.

Source: Valor

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