U.S. ag is paying the price for stalled trade agreements

Following the contentious debt-ceiling vote, the U.S. Congress left town for its August recess without finalizing action on stalled free trade agreements (FTA) with South Korea, Panama and Colombia, but Floyd Gaibler, U.S. Grains Council director of trade policy, is hopeful all three will be approved some time in September.

“A delayed vote would be unfortunate, since it would further delay getting these FTAs in place,” said Gaibler, noting that FTAs with competitors are moving forward. South Korea’s FTA with the European Union went into effect July 1 and Colombia’s FTA with Canada will take effect Aug. 15.

“The lack of these agreements diminishes our ability to be competitive and threatens further erosion in our corn exports to Colombia,” he said.

As the political and economic pressure to create more jobs becomes more apparent, he believes Congress and the President will come to an agreement on a trade jobs program that has held up the FTA votes, especially since the pacts have clear bipartisan support.

“Once we get passage, the Council can re-engage with our customers to retain and build market share in all three countries,” he concluded.

For U.S. corn farmers, failure to approve the Colombia agreement has been especially costly. Colombia was the sixth-largest U.S. corn market and was growing until 2009, when Colombia’s trade agreement with South America’s Mercosur nations reduced tariffs on Argentina and Brazil to 6.9 percent, a level that will continue to decline until it reaches zero in 2018.

Failure to pass the Colombia FTA leaves U.S. corn with a 15 percent tariff, and U.S. exports have declined each year since. Sales that totaled 2.6 million metric tons (103.4 million bushels) as of July 23, 2008, dropped to 1.2 million tons (48.5 million bushels) in 2009, 955,000 tons (37.8 million bushels) in 2010, and 527,000 tons (20.8 million bushels) as of July 21 this year.

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