June 14, 2004

US Trade Agreement With Morocco To Boost US Durum Wheat Sales

Canadian durum wheat's dominant market share of Moroccan imports is likely to diminish considerably in favor of U.S. durum once the long-awaited free trade agreement between the U.S. and Morocco is ratified, industry sources said Friday.
 
Under the free trade agreement between Morocco and the U.S. awaiting approval from the U.S. Congress, an initial quota of 250,000 tons of U.S. durum will be made available to Moroccan importers with a 25% discount on the prevailing import rate.
 
That import tariff will be changed soon for the marketing year that began June 1 to 95% from 75% for the first 1,000 dirham ($1=MAD8.8) per ton of the CIF purchase price.
 
"A 25% discount is very interesting for U.S. exporters. It will be a significant advantage," said George J. Galasso, regional director of U.S. wheat associates in Casablanca.
 
"It will mean roughly an 8% reduction on the tax paid price since the duties only effect the first 1,000 dirhams of the purchase price but that's still advantageous."
 
The U.S. free trade agreement with Morocco will also allow the initial quota of 250,000 tons of durum to increase by 10,000 tons annually and the import tariff on U.S. durum wheat will gradually be completely phased out by the 10th year of the agreement.
 
Moroccan buyers prefer Canadian wheat because it is of a higher quality than U.S. durum. But at a 25% discount, such preferences will probably be brushed aside in favor of economic considerations, traders say.
 
"The durum grown around the desert regions of America is considered dry by millers in Morocco and the U.S. durum grown in the north is not considered as good as the Canadian but a 25% discount will certainly make U.S. durum more popular," said one Casablanca-based trader.
 
In the 2003-04 marketing year that ended May 31, Morocco imported a total of 674,900 tons of durum, of which 481,900 tons, or 71% of the total imported, was of Canadian origin and 75,200 tons, or 11% of the total, was of U.S. origin, according to Moroccan government statistics.
 
France exported 63,100 tons of durum to Morocco, or 9% of the total imported, and Australia 54,700 tons, or 8% of the total, in the same period.