Driven by exemption Free Trade Agreement rates in North America (NAFTA), orange juice exports from Mexico to the United States, overthrew the leadership of Brazilian juice in the American market. A survey by CitrusBR to data from the United States Department of Agriculture (USDA) shows that in the last 28 years the Mexican American FCOJ imports jumped from 9,772 tons to 74,680 in 2019, an increase of 664.2%. Thus, the participation of Mexico in the US market increased from 6% to 46%.
In the same period, Brazil’s sales fell 50.7%, from 144 538 tons to 71 114 tons in 2019. As a result, Brazil’s share to 89% in 1993, fell to 44% last year. “When we look at the period, US imports continue at a level around 155 thousand tons of FCOJ. What has changed is the aggressive entry of Mexico in this market, “says the executive director of CitrusBR, Ibiapaba Netto.
The explanation for the advancement of Mexican product is the difference of tariff schemes. Since 2008, Mexico has duty-free to put your juice in the US, thanks to NAFTA. But the Brazilian juice is taxed at $ 415.86 per ton to access that market. Only in the period between 2008 and 2019 the Brazilian FCOJ was taxed at $ 548 million in import tax, while Mexico failed to pay US $ 405 million thanks to the enactment of NAFTA. “The expansion of the Mexican American in FCOJ imports happen at the expense of a heavy tax on the Brazilian product,” said Netto.
The survey also shows the impact of tariffs on the performance of Brazilian exports and the difficulty in maintaining the leadership in the FCOJ market. When evaluating the net receipt of the exporter after applying import tax deductions, clearance and freight costs, maritime and land in the Brazilian case for Mexicans, what you see is a great loss of value of the national product.
While the Mexican juice has a FOB US $ 1,378.75 per ton, the Brazilian competitor receives the same ton of FCOJ 66 ° Brix US $ 894.95 – a difference of US $ 484.9 per tonne in favor of the Mexican exporter. “On the Brazilian side, we have some efforts to try to put the national orange juice in the international agreements map” ponders the executive, citing as an example the Mercosur agreement / European Union, finalized in 2019. “The agreement provides for immediate tariff elimination to reach 50% to 0% within 10 years. But there is no deadline for ratification this happen, “he says.
The tariff issue highlighted in the American market can also compromise the performance of Brazilian orange juice in other markets. To enter Europe, Brazil juice pays a rate of 12.2% against 4.2% of Mexican juice. The Brazil via Mercosur is also negotiating trade agreement with South Korea that the rate for the orange juice is reduced to zero as already happens for juice produced in Florida and that just fuels that country. “That would be an important milestone whereas, in the past, Brazil has even exported over 30,000 tons per year and today almost does not export more to that destination, “said Netto.
This text was translated by machine from Brazilian Portuguese.