Canada-Colombia FTA Puts Critical U.S. Wheat Market at Risk

July 9, 2010 Bookmark and Share

NAWG and U.S. Wheat Associates (USW) put a spotlight this week on the loss of market share U.S. producers are facing in Colombia due to a nearly-finalized bilateral free trade agreement between that country and Canada.

NAWG CEO Dana Peterson and USW President Alan Tracy highlighted this threat in a joint statement released Tuesday and in media interviews prompted by it.

The Canadian parliament has ratified its free trade agreement (FTA) with Colombia that will allow Canadian wheat to enter Colombia duty free as soon as this summer.

The agreement gives a major wheat-producing competitor an immediate price advantage in a market where U.S. wheat exports had earned a dominant market share, meaning U.S. wheat producers could lose sales worth $70 million today to Canada at a time when they can least afford it. In fact, U.S. farm families now face losing a substantial portion of agricultural exports to Colombia worth nearly $1.7 billion, including $330 million in wheat exports, in 2008.

Even more disturbing is the fact that U.S. farmers should never have faced this dilemma. That is because while the United States government has failed to ratify a bilateral FTA it negotiated with Colombia in 2006 that would allow most American agricultural exports to enter Colombia duty free, Canada has moved ahead with its own trade agenda.

For four years, NAWG, USW and many other agricultural organizations have strongly advocated for U.S.-Colombia 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 cents per bushel higher under a ratified U.S.-Colombia FTA.

As an industry dependent on exports for half its sales, export opportunities and free trade are essential. The industry was encouraged to hear President Barack Obama give trade a more prominent role in his administration’s economic recovery agenda and that the President recognized U.S. inertia on trade only allows other nations to fill the void while we lose the chance to create jobs on our shores.

Obama recently pledged to send the Korea-U.S. FTA to Congress by the November G-20 meeting in Seoul. Last week, the House Agriculture Committee passed H.R. 4645, the Travel Restriction Reform and Export Enhancement Act. If signed into law, it would clarify how U.S. farmers and agricultural businesses conduct sales to Cuba and remove long-standing travel restrictions, which together have significantly constrained wheat growers’ market share there.

Such steps are encouraging, but do not carry wheat producers far enough. Today, 126 trade agreements are being negotiated that exclude the United States, yet each involves current U.S. trading partners. If the likely fallout from the Canada-Colombia FTA is any indication, such agreements represent a grave threat to the U.S. economic recovery.

NAWG and USW will continue to work together and with other organizations to urge the Administration and Congress to resolve any remaining issues with the pending agreements and move toward approval as soon as possible.

For more on the importance of trade to the U.S. wheat industry, please visit www.wheatworld.org/trade or http://www.uswheat.org/whatWeDo/tradePolicy.