Brazil and the European Union (EU) have reached a bilateral agreement on allocation of soft commodities in line with changes in the size of the UK post-Brexit bloc. Under the new deal, the EU will cut quotas, but in return the UK has decided to open other quotas proportionally while maintaining export windows to both Brazilian markets.
Brazil has access to several export quotas to her EU for sugar, chicken, beef and turkey meat. Through this mechanism, Brazil will be able to reduce tariffs on export quotas.
Brazilian news agency Valor noted that Brazil’s sugar export quota was reduced from her 388.12 thousand tonnes to her 341.55 thousand tonnes, with the remaining amount diverted to the UK. The EU has opted to leave tariff reductions of €11/tonne in the first year of the agreement and €54/tonne in the second year of the renewed Brazilian quota as Croatia joined the EU bloc.
Similarly, another quota shared by Brazil with other exporters increases from 371,880 tonnes to 341,460 tonnes.
For poultry (salted, processed, frozen, etc.), some quotas dedicated to Brazil will decrease from 338.88 thousand tons to 244.27 thousand tons, a decrease of 27.9%. Conversely, this decline in the EU will lead to an increase in the UK quota, which will increase sales of Brazilian poultry in this market over the next few years.
The Brazilian boneless beef market, currently at 10,000 MT, will drop to 8.95,000 MT. The quota of frozen beef Brazil shares with other markets will be reduced from 63,700 tonnes to 19,700 tonnes. As a result of this sharp decline, the EU has committed to offsetting it by reducing tariffs from 20% to 15%.
The EU’s total cereal quota was changed from 278,000 to 276.4,000 tonnes. In other words, the EU keeps almost all of its volume at a low rate. For plywood, the EU quota is reduced from 650,000 tonnes to 448,500 tonnes.
The low-rate import quota for table grapes has been reduced from 1,500 tons to 885 tons. Brazil’s export quota of 1,500 tonnes of orange juice is his EU-specific and has not changed. Similarly, export quotas for common juices have been reduced from 7.04 thousand tons to 6.55 thousand tons.
Now that negotiations between Brazil and the EU have concluded, European countries will need to obtain internal approval before signing the deal, which could take months.
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Source: Mercosur
