Argentina’s meat production chain was elated to hear that in the freshly inked Reciprocal Trade and Investment Agreement with the United States, the nation’s tariff-free export quota has been set at 100,000 tonnes – previous announcements by President Javier Milei himself had led to speculation that the cap would only be 80,000 tonnes.
The Foreign Ministry in Buenos Aires also underlined the importance the agreement with the US has for the farming sector to reduce tariffs.
“The US government will grant an unprecedented expansion to 100,000 tonnes for the preferential access of beef into its market. This ensures an additional 80,000 tonnes in 2026, besides the 20,000 tonnes already given to this country, which will help increase Argentine exports of this product by nearly US$ 800 million,” the government said in a statement.
Regardless of the incoming dollars, in the domestic cattle industry they read this announcement as a productive sign.
The United States is a market which demands beef of a high standard of health, traceability and specific cuts, which forces tidier processes and raises the bar throughout the chain.
One of the first repercussions from the farming and agro-industrial sector came from the president of Argentine Rural Confederations (CRA), Carlos Castagnani: “Trade openness has always been a request from the agricultural sector, because it’s the tool that helps us increase exports, generate more activity and seize the huge productive potential in this country. To integrate ourselves into international trade with clear rules is key to development,” he said.
He added that “moving forward in the meat trade is especially important for Argentina,” because “we produce the best beef in the world and we have an internationally renowned production system.”
In the United States, the cattle stock is still not reacting, its meat production is falling with demand up. Stock totals 86 million heads of cattle, the lowest level in 75 years. While its production has decreased by 10 percent in the last five years, its imports grew by 67 percent by going from 1.5 to 2.5 million tonnes between 2021 and projections for this year by the United States Department of Agriculture (USDA).
In the meantime, in China, a recent quota for beef only caused international prices to jump by 20 percent. It totalled 2.7 million tonnes, when last year 3.3 million tonnes were imported from China. Unless the quota is expanded, the entry of beef this year may be much lower than the needs of the market and that will jack up prices.
In addition, Brazil, which is China’s main supplier and the main exporter in the world, may have 400,000 tonnes waiting at the Asian giant’s ports over a quota of 1.1 million tonnes. This means it would cover its cap in a few months more, which will surely raise prices.
According to the report by the Institute for Promotion of Beef in Argentina (IPCVA), during December foreign sales had gone down by 3.7 percent year-on-year in terms of volume, measured in tonnes by the weight of the product.
As from last November, the retraction was even sharper, at 13.8 percent.
This contraction confirms the trend observed in the cumulative annual level, where the lower shipment of beef was linked mainly to a reduction in purchases from its main destination, China.
Other key details
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It is the first instrument of the kind in the region incorporating commitments on investments, which consolidates the strategic alliance and mutual trust with the United States, which already has over 330 companies operating in this country.
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The initiative positions Argentina as the first country in South America to sign an agreement of this scale, between a select group of countries with preferential access to the US market, strengthening its international insertion and promoting a more balanced association with the main economy and largest importer in the world.
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The US government ratified its commitment to review tariffs on steel and aluminium when the time comes, established under Section 232 of the Trade Expansion Act.
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The US will eliminate mutual tariffs on 1,675 Argentine products over a wide range of productive sectors, which will allow the recovery of exports to the tune of US$1.01 billion.
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The US will also work, through such institutions as the Export–Import Bank of the United States (EXIM Bank) and the US Development Finance Corporation (DFC), to support the financing of investments in critical sectors of Argentina, in collaboration with the private sector in the US.
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Argentina, in turn, will eliminate tariffs on 221 positions, such as machinery, transport material, medical devices and chemical products, will reduce 20 other positions by two percent, mainly auto parts, and will grant quotas for vehicles, meat and other farming products.
Argentina has also agreed to adopt the most modern international standards in intellectual property, in order to unburden the bureaucracy of the sector to expand opportunities for the innovation and promotion of Argentine talent.
The signing of the historic agreement “consolidates a strategic relationship between both countries based on economic openness, in clear rules for international trade, and in a modern outlook of trade complementarity,” commented the Argentine President’s Office.
The goal is to reduce tariff and non-tariff barriers, facilitate the trade of goods and services, modernise customs procedures and promote investment in such strategic sectors as energy, critical minerals, infrastructure and technology.
– TIMES/NA
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