NASHVILLE, Tenn. – U.S. wheat exporters are concerned about losing market share to Canada and Argentina in their most important South American market.
“The free trade agreement known officially as the U.S.-Colombia Trade Promotion Agreement continues to languish in Congress with its ultimate ratification facing an uphill battle more than a year after both countries signed the agreement,” said U.S. Wheat Associates in a recent newsletter.
Alan Tracy, president of USW, the industry’s market development organization, said ratification of the pact has turned into a political football over concerns about Colombia’s labour practices and environmental abuses, issues he contends have been addressed in side agreements.
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He worries that the longer ratification is stalled, the more U.S. wheat growers risk losing ground to farmers in Argentina and Canada, two countries that are negotiating their own agreements that would see duty-free wheat flowing to Colombia.
Tracy said there would be enough of a tariff disadvantage to seriously disrupt trade to a destination that is the single largest buyer of U.S. wheat in South America.
“I’m talking about enough to kill the trade. Their tariffs on imports are around 30 percent on wheat. If somebody else gets in there at zero and you’re at 30, you’re dead,” he said.
According to Foreign Affairs and International Trade Canada, negotiations with Colombia are ongoing and Canada remains optimistic that an agreement can be reached in the near future.
Tracy said Canada has provided the toughest competition in that market for some time, which is why he hopes the U.S. can gain a competitive advantage by simply ratifying a deal that is already in place.
“It really should be a U.S. market. It’s in our backyard,” he said.
The group has the support of the U.S. Department of Agriculture. In his address to the 4,525 delegates attending the 2008 Commodity Classic, an annual gathering of U.S. corn, soybean and wheat growers, agriculture secretary Ed Schafer said the United States took a great step forward when it signed the Peru free trade agreement in December.
“The next chapter of this story should be the passage of the free trade agreements in Korea, Panama and Colombia,” he said.
Taken together, those three agreements would provide the opportunity for $3 billion US of increased agricultural exports per year.
Schafer will be leading a delegation of U.S. members of Congress to Colombia in a few weeks to visit with labour leaders and farmers who are shifting from growing drugs to producing flowers, fruits and vegetables.
Corn and soybean growers also support ratification of the Colombian pact but the wheat growers have the most to gain from the deal. The agreement would provide tariff-free access to a 1.5 million tonne wheat market.
The International Trade Commission projects that eliminating tariffs would boost U.S. wheat exports to that destination by 11 percent, a value of $19 million.
Tracy said a vote hasn’t been scheduled in Congress. Once it is scheduled it won’t be a slam dunk because the pro-trade majority in Congress is slim.
