MercoPress. South Atlantic News Agency

China, EU, Korea, Chile suspend beef and poultry imports from Brazil

A charm offensive by President Temer, who even invited foreign ambassadors to a traditional meat restaurant in Brasilia late Sunday, failed to calm importers.

The fallout from Brazil's rotten meat scandal accelerated Monday when China, a huge market, suspended imports and the European Union and South Korea demanded a partial ban. Another ban on Brazilian meat imposed by Chile sparked fears of a trade spat between the two South American partners.

 A charm offensive by President Michel Temer, who even invited foreign ambassadors to a traditional meat restaurant in the capital Brasilia late Sunday, failed to calm importers.

China, which with Hong Kong is Brazil's biggest meat export market, said it needed to know more about the allegations that major meatpacking businesses bribed inspectors to get health certificates and masked tainted meat as fit for consumption.

“Until it receives more information, China will not unload meat imported from Brazil,” the Brazilian agriculture ministry said in an online statement. It said Brazilian Agriculture Minister Blairo Maggi will hold a videoconference with Chinese authorities to offer “clarifications.”

The European Commission, the EU executive arm, called on Brazil to immediately halt exports by four companies implicated in the scandal, the bloc's spokesman Enrico Brivio told reporters in Brussels. Shortly after, the Brazilian government said it had complied, halting exports by all 21 meat processors under investigation.

But after Chile announced a “temporary” ban on Brazilian meat products, Maggi angrily threatened reprisals.“We are major importers of Chilean products: fish, fruit and other products, and Brazilians demand that we should erect barriers. Trade is like that,” Maggi said.

At least 30 people have been arrested in the scandal, with Brazilian police raiding more than a dozen processing plants.

A poultry-processing plant run by the multinational BRF group and two meat-processing plants operated by the local Peccin company were shut down, the agriculture ministry said. Brazil is the world's biggest beef and poultry-exporting nation and the row is especially unwelcome when the country is struggling to exit its worst recession in history.

Market analysis group Capital Economics warned the “developing scandal over Brazil's meat exports could plausibly derail the country's economic recovery.”

“Brazil is facing a potential loss of export revenues of about US$3.5 billion. That's the equivalent of about 0.2% of GDP,” Capital Economics said. “The economic impact will depend to a large extent on how long any bans stay in place. There are some reasons for optimism here.”

Officials are arguing that there is no systemic corruption or health problem in the meat industry and that the police operation uncovered only a few bad apples.

“Agribusiness is extremely important for us in Brazil,” Temer said in an address Monday. “It cannot be discredited just because of a small group.”

The scandal also broke just days before the start of negotiations to seek a free-trade accord between the European Union and Mercosur.

Brazilian meat is exported to more than 150 countries, with principal markets also including Japan, Saudi Arabia and Russia. Sales in 2016 reached US$5.9 billion in poultry and US$4.3 billion in beef, according to Brazilian government data. Total meat exports amount to about 7% of exports and 0.7% of GDP.