Mexico inflation pact eases food oversight in ‘goodwill’ move

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MEXICO CITY (Reuters) – Mexico’s move to exempt some foodmakers and retailers from quality checks from national health regulators as part of an anti-inflation plan to keep costs down is a “goodwill” agreement, President Andres Manuel Lopez Obrador said Monday.

Last week, Lopez Obrador and officials announced the plan made with companies such as Walmart (NYSE:WMT)’s Mexico unit and tortilla maker Gruma. The plan also exempts them from paying import tariffs on food products.

The agreement puts the responsibility on the signatory companies of ensuring that their imported products meet safety and quality standards. Finance Minister Rogelio Ramirez said it applied to all food products, not just basic foodstuffs, brought in by the companies.

The measure, which must be published in Mexico’s official gazette to take effect, has stirred discontent from competitors. It’s also sparked concerns that the deal could violate a trade deal with the United States and Canada and may also allow crop and animal diseases to be brought in.

“We have to ensure that food prices do not increase,” the president said in a regular news conference Monday, when asked about the weakened regulations. 

Lopez Obrador said the move was made to cut through bureaucratic red tape from regulators Senasica, Mexico’s agricultural inspector, and Cofepris, a health regulator.

All trade between Mexico and its main partner, the United States, has been tariff-free for years. Mexico also has trade agreements with several dozen other nations that include clauses slashing tariffs for agricultural products.

If Mexico allows food products to enter from countries without such agreements, it could be in violation of existing treaties, experts say. 

“That’s the punitive part,” said Rocio Ruiz, a former economy ministry official, regarding a potential trade agreement violation.

“In general, these treaties do prohibit you from discriminating against trade allies by giving such a benefit to national companies,” she said Monday at a forum organized by economic competition authority Cofece.

Senasica has since said it was working with Mexican industry to protect food production and that it will redouble efforts to help importing firms avoid bringing in pests or diseases.