WASHINGTON, May 15, 2012- President Obama today announced the implementation of the U.S-Colombia Trade Promotion Agreement, prompting statements from the U.S. Trade Representative, Agriculture Secretary Tom Vilsack, members of Congress and various commodity groups.
Effective immediately, more than 80% of U.S. exports of consumer and industrial products to Colombia will become duty-free, including more than half of U.S. exports of agricultural commodities to Colombia. Agricultural equipment and fertilizer are also now duty free.
“This agreement will provide American businesses, farmers and ranchers with significantly improved access to the third largest economy in South America,” said USTR Ambassador Ron Kirk. He said the value of the U.S.-Colombia trade agreement will be seen in lower tariffs on autos, consumer goods, agricultural commodities, machinery, and other exports from the United States, which will make our goods more competitive in the Colombian market.
“That means support for well-paying jobs at home.” Kirk said.
Agriculture Secretary Vilsack said that in expanding U.S. exports by more than $1.1 billion and increasing U.S. GDP by $2.5 billion, the agreement with South America's third-largest economy achieves two key trade objectives for U.S. agriculture: “It immediately provides vastly improved access to Colombia's market, and it levels the playing field with respect to third-country competitors.”
The United States exported $1.1 billion of agricultural products to Colombia in 2011, Vilsack said, adding that under the agreement, American farmers and ranchers can expect to see their exports grow by more than $370 million, or more than one-third of the current total.
Colombia will immediately eliminate duties on wheat, barley, soybeans, soybean meal and flour, high-quality beef, bacon, almost all fruit and vegetable products, wheat, peanuts, whey, cotton, and the vast majority of processed products. The Colombia TPA also provides duty free tariff rate quotas (TRQ) on standard beef, chicken leg quarters, dairy products, corn, sorghum, animal feeds, rice, and soybean oil.
House Ways and Means Committee Chairman Dave Camp, R-Mich., said the agreement going into force “is cause for celebration,” and commended the Obama administration and Colombian President Santos for their efforts “to ensure prompt implementation of the agreement after Congress approved it in October.”
Trade Subcommittee Chairman Kevin Brady, R-Texas, said “U.S. workers, farmers, manufacturers, and service exporters . . . can now begin to recapture export market share that we lost in Colombia during the years that the trade agreement was not in force.”
The American Feed Industry Association (AFIA) took the occasion to observe since 2005, the United States has continued to lose significant animal feed and feed ingredient market share to competing countries. The United States has seen a decrease in market share of Colombia’s animal feed and feed ingredient imports from 65.8 percent in 2005 to 18.7 percent in 2010, while other countries have experienced a dramatic rise.
The agreement, the AFIA said, establishes a duty-free tariff rate-quota of 194,250 metric tons for animal feed with all duties to be phased out over 12 years. The current system, the group said, applies tariff rates ranging from 5%-20% percent on certain products, while others are subject to Colombia’s price bands with tariffs ranging from zero to the World Trade Organization bound rate of 97 percent, depending on world prices.
“U.S. products will now have greater access to the Colombian market, competing on a more level playing field against other countries,” said AFIA president and CEO, Joel G. Newman. “AFIA and its members are not only looking forward to increasing exports, but to the resulting job opportunities for American citizens.”
The National Association of Wheat Growers called the pact’s implementation “a huge victory for U.S. wheat farmers.” Noting that the agreement immediately eliminates all tariffs on U.S. wheat imports to Colombia, the group said it also ends a significant tariff disadvantage U.S. farmers have faced compared to Canadian and Argentine wheat imports there.
“This is a very good day for wheat farmers,” said Randy Suess, a wheat farmer from Colfax, Wash., and chairman of U.S. Wheat Associates (USW). “The tariff situation has basically forced our largest customer, historically, in South America to buy more wheat from Canada and Argentina. Now our customers in Colombia will not have to pay the tariff, and we can compete equally on the basis of quality, supply and service,” he said.
U.S. wheat farmers rely on exports to market about half of their crops each year. In the marketing year 2010/2011, Colombia imported from Gulf and Pacific Northwest tributaries about 800,000 metric tons of U.S. wheat from five of six classes. However, U.S. wheat sales for this marketing year are down about 45 percent year on year, mainly due to the Canada-Colombia FTA that went into effect on Aug. 15, 2011. Wheat imported from Argentina has also enjoyed duty-free status under the South American Mercosur trade agreement.
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