April 18, 2006

US gains greater access to Peru's corn market
 

The US and Peru signed a free trade agreement last week to improve market access for US grains and co-products, according to the US Grains Council (USGC).

The US-Peru Trade Promotion Agreement (PTPA) will establish a tariff rate quota (TRQ) for US corn and remove US feed grains from the Peruvian Price Band System.

The reduction and elimination of tariffs on US corn, sorghum and barley under the PTPA would benefit the US feed grains industry, said Kevin Natz, USGC director of trade policy.

The agreement would allow immediate tariff elimination under a corn tariff rate quota and provide a clear competitive advantage for the US over Argentina, the main exporter to Peru currently.

Peru imported 1.05 million tonnes of corn in marketing year 2005. The US holds a quarter of the market while Argentina has the rest. The agreement would allow the United States to immediately increase its overall market share, Natz said. 

The TRQ alone would help the US gain half the market as it is set at half a million tonnes with an annual increment of 6 percent a year.

The tariffs on over-quota US corn will be gradually phased out over 12 years, giving the United States a definite edge over Argentine corn, said Natz.