U.S. wheat sales to Colombia could drop by more than 50 percent if Congress fails to soon ratify the U.S.-Columbia free trade agreement (FTA), according to Colombian wheat buyers and millers visiting the U.S. this week.
That could cost U.S. wheat producers more than $87 million in annual sales, say officials from U.S. Wheat Associates (USW), the U.S. wheat industry’s export market development organization.
If ratified, the U.S.-Colombia FTA, formally the U.S.-Colombia Trade Promotion Agreement, would immediately eliminate most tariffs on U.S. exports including wheat with all remaining tariffs phased out over time, according to the Office of the U.S. Trade Representative.
Canada this fall expects to ratify its own FTA with Colombia. That would give a major wheat-exporting competitor an immediate price advantage over U.S. wheat exports, USW says. U.S. wheat in Colombia currently has a nearly 70 percent share, about 27 million bushels of wheat.
“If importers are forced to pay duties on U.S. wheat and not on Canadian wheat, our members believe U.S. market share is likely to fall to as low as 30 percent,” said Jaime Jimenez, executive director of FEDEMOL, the Colombian millers association.
“We have long-standing ties with the U.S. wheat industry and we prefer U.S. wheat, but the difference in price in that situation would be impossible to ignore,” Jimenez said.
Jimenez and others are meeting this week with members of Congress and the Obama administration to stress the benefits of the pending FTA not only for U.S. exporters, including wheat producers, but also for their enterprises and the Colombian economy.
Wheat would not be the only commodity hurt if the U.S.-Colombia FTA is not ratified. According to the USDA, the U.S. exported a record $1.67 billion of agricultural products to Colombia in 2008. USDA says current tariffs between the United States and Colombia allow 99.9 percent of Colombian food and agricultural exports to enter into the United States duty-free, while no U.S. agricultural exports to Colombia currently receive duty-free treatment.
Argentina enjoys advantages from the Mercosur agreement allowing for duty-free access that already puts U.S. wheat producers at a disadvantage. Colombia also anticipates signing a trade agreement with the European Union that will also give those wheat growers duty-free market access to the Colombian market.
“Ratifying this FTA is the right thing to do for all American farmers and the right thing to do for the people of Colombia, who I know are working hard to establish a strong, legitimate economy,” said South Dakota farmer Chet Edinger. Edinger, who visited Colombia in 2008 as part of a USW-sponsored trade team, is with the Colombian representatives in Washington and will host the visitors at his wheat, corn, and soybean farm near Mitchell, S.D., this week.