The U.S. and Colombia today officially implemented the free trade agreement (FTA) first signed in 2006. The pact immediately eliminates all tariffs on U.S. wheat imports to Colombia and ends a tariff disadvantage U.S. farmers have faced compared to Canadian and Argentine wheat imports there.
“This is a very good day for wheat farmers,” said Randy Suess, a wheat farmer from Colfax, Wash., and chairman of U.S. Wheat Associates (USW). “The tariff situation has basically forced our largest customer, historically, in South America to buy more wheat from Canada and Argentina. Now our customers in Colombia will not have to pay the tariff, and we can compete equally on the basis of quality, supply and service.”
According to the National Association of Wheat Growers, implementing this FTA is particularly important to U.S. wheat farmers, who rely on exports to market about half of their crops each year. In marketing year 2010/2011, Colombia imported from Gulf and Pacific Northwest tributaries about 800,000 metric tons of U.S. wheat from five of six classes. However, U.S. wheat sales for this marketing year are down about 45 percent year on year, mainly due to the Canada-Colombia FTA that went into effect on Aug. 15, 2011. Wheat imported from Argentina has also enjoyed duty-free status under the South American Mercosur trade agreement.
“A lot of people have joined us in working hard to get the U.S.-Colombia agreement approved by Congress, signed by the President and now implemented,” said Erik Younggren, a wheat farmer from Hallock, Minn., and president of NAWG. “While the process of removing our trade barriers with Colombia has been a long one, we are eager to get this market back on track.”
The U.S. wheat industry believes this agreement, along with the recently implemented FTA with South Korea and a pending FTA with Panama, will help the United States rebuild and expand markets, grow our economy at home and maintain the status of the United States as the most reliable supplier of wheat in the world.
“The free trade agreement with Colombia holds a great deal of potential for America’s soybean farmers,” said American Soybean Association President Steve Wellman, a soybean farmer from Syracuse, Neb. “The pact expands a valuable and growing export market for American soybeans, meal, oil and products that require soy inputs like dairy, meat and poultry. The agreement also helps us regain lost market share in Central and South America’s third largest economy.”
The American Soybean Association says the agreement ensures that more than half of all U.S. farm exports to Colombia—including soybeans and soybean meal and flour—will become duty-free, with virtually all of the remaining tariffs to be eliminated over the next 15 years. The agreement also provides duty free tariff rate quotas (TRQ) on soybean oil, as well as livestock and dairy exports that utilize soybean inputs. To commemorate the event, ASA staff will join Colombian Ambassador Gabriel Silva for a reception at the Colombian Embassy in Washington today.
Soybeans and soybean products are the largest U.S. agricultural export commodity, totaling nearly 1.5 billion bushels in 2011, with a value of more than $22 billion. Last year, the U.S. exported more than $182 million in soybeans and soybean products to Colombia, as part of $832 million in agricultural products. The International Trade Commission (ITC) estimates that the agreement will expand overall exports to Colombia by more than $1.1 billion and support thousands of additional American jobs.
And here’s a piece of what USDA Secretary Tom Vilsack had to say,
“Last year, the United States exported $1.1 billion of agricultural products to Colombia. Under the agreement, American farmers and ranchers can expect to see their exports grow by more than $370 million, or more than one-third of the current total. Colombia will immediately eliminate duties on wheat, barley, soybeans, soybean meal and flour, high-quality beef, bacon, almost all fruit and vegetable products, wheat, peanuts, whey, cotton, and the vast majority of processed products. The Colombia TPA also provides duty free tariff rate quotas (TRQ) on standard beef, chicken leg quarters, dairy products, corn, sorghum, animal feeds, rice, and soybean oil. Over the next few years, as additional barriers fall and more U.S. businesses market products to Colombia’s expanding economy, American agricultural exports will create new opportunities for our businesses, workers, farmers and ranchers, thereby supporting more and better jobs for Americans.
Source: NAWG, ASA & USDAShare