U.S. Grains Council Chairman Don Fast Tuesday hailed the announcement of the U.S.-Panama Free Trade Agreement (FTA) entering into force on October 31.

“The U.S. corn industry has traditionally been the sole supplier to this market with poultry sector as the dominant end-user of feed grains. The implementation of the U.S.-Panama FTA ensures that U.S. corn, sorghum, barley and co-products can continue to be competitive in this fast growing market”, Fast said.

Panama is already an important market for U.S. farmers and agribusinesses. In 2011, the United States exported nearly $505 million of agricultural products to Panama. Top U.S. exports were corn, wheat, soybean cake and meal, dairy products, poultry meat, and rice. Upon implementation of the FTA, U.S. exporters will receive duty-free treatment on products accounting for nearly half of current trade, with tariffs on most remaining agricultural products phased out within 15 years.

With the FTA’s entry into force a tariff-rate quota (TRQ) of 298,700 metric tons (11.8 million bushels) with zero tariffs will apply to corn. The quota would be increased annually 3 percent (compounded) and corn imports exceeding the quota would have a 40 percent levy. The over-quota tariff of 40 percent will be gradually eliminated between the fifth and fifteenth years of the Agreement. Sorghum will be duty-free within five years, while barley, DDGS and crude corn oil would receive immediate duty-free treatment.

The U.S.-Panama FTA was negotiated in 2007. However, the import demand for corn in Panama has risen sharply over the last five years to levels well above the 298,700 tons agreed to at that time.

With the agreement now in force, the Council will work cooperatively with the Panamanian poultry industry to seek a mutual agreement between both governments to accelerate the TRQ and provide opportunities for the U.S. corn sector to supply that additional demand.

Implementation of the FTA will also accelerate the Council’s ability to work with Panamanian end-users to promote feed grain co-products and value-enhanced grains. In addition, promoting the use of corn co-products will provide cost savings to feed millers and as a result create more demand for US corn.