U.S. Must Actively, Aggressively Pursue Colombia Trade Agreement
- Published on Thursday, 25 March 2010 05:00
By Terry Vinduska, U.S. Grains Council Vice Chairman
This month I had the opportunity to travel to Colombia, Panama and the Dominican Republic with the U.S. Grains Council where I saw firsthand the damaging impact of the unsigned Colombian free trade pact. The failure of the United States to ratify the Colombia Trade Promotion Agreement (CTPA)cost the U.S. corn sector $314 million in lost corn sales to Colombia from 2008 to 2009. During this time frame, additional losses of between $200-$300 million were seen for the U.S. barley, sorghum, soybean and wheat sectors. Last year, the U.S. market share of Colombia’s feed grains imports dropped from 96 percent in 2007 to 32 percent. Argentina made up 37 percent of the market share and Brazil had 26 percent.
The lack of CTPA is also threatening U.S. market share in surrounding countries in the Caribbean and Central America. South America is establishing trade channels that are fostering change in trade patterns. Firming trade and market channels will become harder to unwind as time passes. The United States needs to work actively and aggressively to pass this pending legislation before additional real dollars and U.S. markets are lost.
This agreement goes far beyond trade as it can have a positive impact on low-income, rural populations. Almost 99 percent of Colombia’s exports to the United States enjoy duty-free access, while all U.S. feed grains and co-product exports to Colombia are imposed with a 15 percent import tariff. Although Argentina and Brazil face a 6.9 percent tariff, the Colombian people, especially the poor, are suffering the most as they are deprived from fairly priced food products. As importers purchase higher priced corn and agricultural products from South America, cost of production increases, along with food prices. What surprised me the most was the frustration local importers and consumers expressed over their inability to purchase from the United States. Everyone we talked to wants to purchase U.S. grains. They recognized the United States as a long-term, reliable supplier and prefer to trade with the United States.
Ratifying the CTPA will reduce feed and food costs in Colombia while simultaneously supporting the U.S. market share. We hear a great deal about increasing trade with Cuba, and rightly so, but the Columbian market for U.S. corn is four times larger than the potential Cuban market. I would hope that all those with an interest in U.S. agriculture would aggressively promote both free trade agreements.