June 29, 2010

Canada ratifies FTA with Colombia, US awaits

The Canada-Colombia free trade agreement has been approved whereas the US is still working on FTA with Colombia.

Competition for Colombia's market share is exploding. US Grains Council Chairman Rick Fruth says despite the fact that Colombia has been the largest market for US agricultural exports in South America, US agriculture has lost significant market share in just a short period due to the continued delay in ratifying the US-Colombia Trade Promotion Agreement. Fruth says the lack of an agreement cost the US corn sector alone US$314 million in 2009.

US agricultural products face a 15% import tariff and Colombia's price band system - which imposes a variable charge on top of regular import obligations. Other countries like Argentina and Brazil, however, only face a 6.9% tariff under the MERCOSUR agreement. The tariff for the four MERCOSUR countries (Argentina, Brazil, Paraguay and Uruguay) will be completely phased out by 2018, according to USGC Director of Trade Policy Floyd Gaibler. Gaibler says ratifying the Colombia trade deal will eliminate the import tariff and price band system for the US. The American Farm Bureau Federation says ratification would result in more than US$815 million more per year for agriculture exports.

Gaibler says the ability of the US agricultural sector to remain competitive in the long-term will rely on the nation's collective ability to supply the global markets with growing demand for feed and food products. He says that can only happen if the US endorses the trade agreements being negotiated and fully re-engage in negotiating bilateral, regional and multi-lateral trade agreements around the world.