Jul 17, 1986

EEC BEEF QUOTA TO LATIN AMERICA SEEN AS "BRIBERY".

AN INTER PRESS SERVICE FEATURE.
BY YOJANA SHARMA

BRUSSELS, JULY 15 (IPS) -- An imminent offer by the European Economic Community (EEC) to increase import quotas for Brazilian, Argentinean and Uruguayan high quality beef has been described as "bribery" by Latin American diplomats here.

EEC sources say the 12-nation communityís executive commission is considering a special import quota this year for 8.000 tonnes of fresh chilled or frozen high quality Hilton beef.

The special quota, they say, is intended to compensate for a 100.000 tonne sale of EEC beef to Brazil which annoyed Brazilís traditional suppliers Argentina and Uruguay.

"They are trying to bribe us", said one Latin American Diplomat here whose country stands to benefit from the new quota.

"They are offering us this in exchange for our silence", he said.

Argentina and Uruguay were furious, when the EEC announced it would supply beef to Brazil at subsidised prices to bride a seasonal shortfall in Brazilís own production.

Argentinean diplomats said it went against an undertaking made by EEC commissioner Claude Cheysson during a trip to Latin America last year that the EEC would not sell subsidised beef in Latin America.

But with a beef surplus of 750.000 tonnes this year, the EEC was eager to get rid of excess which cost some 240 million dollars in storage costs each year, according to an EEC spokesman.

Brazil, which is looking to by some 250.000 tonnes this year, and had already tied up a 90.000 tonne deal with the United States, was the ideal outlet, EEC officials maintain.

Neither Argentina or Brazil could compete with the EECís subsidy even though Argentinean beef has the lowest production cost in the world, according to diplomats.

In reply for a demand for compensation by Argentina and Uruguay for losing their Brazilian market, the Commission has proposed a new quota of high quality beef imports.

EEC farmers, who earn the same for producing low-quality beef as for high quality beef, naturally prefer to cut their production costs for beef, experts say. So the EEC needs to import high-quality cuts.

EEC officials admit that the 8.000 tonne Hilton quota is linked to the sale of EEC beef to Brazil and in the interest of "maintaining harmonious relations" with Brazil, Argentina and Uruguay.

Brazil is expected to be awarded 5.0í00 tonnes of the new quota, 2.000 tonnes for Argentina and 1.000 tonnes to Uruguay.

Officials say this "gesture" will cost the EEC some 28 million dollars this year in suspended levies.

The Hilton beef will be free of EEC import levies but will be subject to a 20 percent duty.

But Latin American Diplomats here describe the quota as a "mere drop in the ocean" compared to the 100.000 tonnes of beef being sold buy the EEC to Brazil.

And it does not compensate the loss of beef markets since the Hilton beef and normal beef markets are separate markets with different supply and demand mechanisms and prices, they say.

"At the moment there is an expansion in the Hilton beef market and a contraction is the market of low quality beef", one Latin American Diplomat said.

The subsidies offered by the EEC, calculated round 1.000 dollars a tonne in some reports, would depress the world price of beef and affect total Latin American exports despite the fact that it reduces the EEC beef mountain.

But the EEC is clearly desperate, diplomats say. In the first six months of this year the EEC bought over 220.000 tonnes of beef into stocks Ė a 50 percent increase over the same period last year and close to a budgeted ceiling of 300.000 tonnes for 1986 as a whole.

Argentina and Brazil may find that the commissionís new quota offer for Hilton beef to compensate may not be worth as much as it would appear at first sight.

The new quota must first be approved by EEC Agriculture Ministers who earlier this year slashed a commission proposal for an extra import quota of 12.000 tonnes of Hilton on top of the normal 29.800 quota to a mere 6.000 tonnes.

Latin American Diplomats are also unconvinced that the sale to Brazil is a one-off affair.

Brazilís beef shortage is due to Brazilian producers holding cattle off the market because of government land reform measures which include compulsory acquisition of under-used land.

Diplomats maintain the shortage could last beyond this year.

An EEC spokesman has said the Commission would not rule out further sales of EEC beef to Latin America and according to some reports the EEC is already preparing to export cut-price beef to Peru.