World Grain - April 2011 - 36

FEATURE: WHEAT TRADE TO DOUBLE BY 2050

USW hoping for approval of FTAs in key markets
Wanting access to three key international markets, U.S. wheat growers are anxiously waiting to see if the U.S. government will approve free trade agreements (FTA) with South Korea, Panama and Colombia. President Barack Obama said he wants to win congressional approval of a free trade pact with South Korea in the next few months and to resolve issues blocking trade deals with Panama and Colombia “as soon as possible this year.” Republicans, since winning control of the House and gaining seats in the Senate in November, have pressed Obama for a timetable for action on free trade pacts with South Korea, Colombia and Panama that were negotiated and signed during the administration of former President George W. Bush. The deals have stalled due to strong opposition from U.S. union groups and many Democrats, especially to the South Korea and Colombia pacts. USW President Alan Tracy said the most important agreement to be struck for U.S. wheat farmers is the one with Colombia, a market which the U.S. been the dominant wheat supplier for many years. However, the Canadian parliament last year ratified a bilateral FTA with Colombia that will, when implemented, allow Canadian wheat to enter the country duty free. He estimates that U.S. wheat producers could lose sales of up to $100 million to Canada if the U.S. fails to reach an FTA with Colombia. “The Canadian FTA with Colombia has the potential to give them a tariff advantage which would overcome the freight differential,” said Tracy, referring to the greater shipping costs Canada incurs in sending wheat to Colombia. “Unless we get ours done, we are going to face a serious loss. Once you’ve lost market share, you don’t win that back instantly.” He said that for the last four years, USW, the National Association of Wheat Growers and many other agricultural organizations have strongly advocated for this agreement. In that time, USW brought influential Colombian millers to the United States who told government officials that if they had to pay duties on U.S. wheat and not on Canadian wheat, U.S. sales and market share would fall dramatically. USW also released a report on the impact of FTAs that showed U.S. wheat exports would be 20 million bushels greater and the farm price would be 10¢ per bushel higher under a ratified U.S.-Colombia FTA. Tracy also noted that “South Korea is an important market for us long term. The potential comes from the greater economic growth in Korea. Panama doesn’t grow wheat and they have a zero tariff in place at the moment, so it would be nice to get that zero tariff locked in.”

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World Grain - April 2011

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