A free trade deal between Morocco and the United States has created uneasiness at the Canadian Wheat Board.
“Obviously there are a few red flags here for us,” said wheat board spokesperson Louise Waldman.
“We want to get our hands on a copy of the agreement and review it as quickly as possible.”
Morocco is Canada’s second most important durum customer, buying an average of 450,000 tonnes annually over the past five years, representing about 80 percent of Morocco’s imports.
The North African kingdom has also bought an average of 130,000 tonnes of non-durum wheat from Canada during that period, out of total annual imports of about two million tonnes.
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The U.S. also exports durum and wheat to Morocco, and the trade deal signed last week rolls back tariffs now levied on wheat imports.
American wheat trade officials say that will provide them with a competitive advantage and a bigger share of the strategically located Moroccan market.
“We are very pleased,” said Barbara Spangler, executive director of the U.S. Wheat Export Trade Education Committee, a farmer-funded trade promotion and lobbying organization.
“We didn’t know if we were going to get anything out of the agreement, but it definitely improves our position.”
The final wording of the agreement was not made public last week, but Spangler said the deal will see tariffs phased out completely for U.S. durum within 10 years. For non-durum wheat, the tariffs will be reduced but not eliminated, unless tariffs on European wheat are reduced to zero.
It also includes a clause guaranteeing that if Morocco negotiates lower tariffs with any other suppliers, those lower rates will automatically be applied to U.S. wheat and durum.
Waldman said that because the final version of the agreement has not been released, the board is uncertain exactly what impact it might have on Canadian sales.
On the positive side, the board has a well established and successful relationship with its Moroccan customers, she said, as evidenced by its 80 percent market share.
“They come to us because our quality is good and they value it and prefer it to U.S. durum,” said Waldman.
But at the same time, she acknowledged there might be reason to worry.
“If we’re in a situation where U.S. durum is getting preferential treatment, obviously that’s a concern for us,” she said.
Moroccan importers pay a tariff on durum consisting of 75 percent on the first roughly $100 US of an import shipment, and 2.5 percent on the remainder. For non-durum wheat, the tariff rate is 55 percent and 2.5 percent.
U.S. sales of durum to Morocco during the period 1998-2003 ranged from a low of 76,000 to a high of 127,000 tonnes. For hard red winter wheat, the range was 159,000-320,000.
“It’s not a huge market,” said Spangler. “But as their economy becomes more stable they will definitely consume a lot more.”
Morocco grows a significant amount of wheat and durum, but output can vary widely each year because of the unpredictable and unforgiving desert climate. During the five-year period 1999-2003, wheat production averaged 3.1 million tonnes, but ranged from 1.4 to 5.2 million.
Wheat is a highly political issue in Morocco because it is the primary crop produced by many small farmers. There is no import quota during the harvest months of June, July and August, although the free trade deal provides that if imports are required during that period, the U.S. will receive preference.
