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US Risks Losing Export Market to Colombia

by 5m Editor
25 June 2010, at 12:37p.m.

US - While the United States sits on the sidelines, competition for market share in Colombia heats up as US competitors negotiate free trade agreements (FTAs).

According to the US Grains Council, the continued delay in ratifying the US-Colombia Trade Promotion Agreement (CTPA) is having a profound impact on US agriculture.

“Despite the fact that Colombia has been the largest market for US agriculture exports in South America and the third-largest market in the Western hemisphere, behind only Canada and Mexico, we have lost significant market share in just a short period,” said USGC Chairman Rick Fruth.

US exports of agricultural commodities declined sharply from $1.6 billion in 2008 to $907 million in 2009, a 46 per cent decline.

“This lack of an agreement cost the US corn sector alone $314 million in 2009. The US market share of Colombia’s feed grain imports dropped from 96 per cent in 2007 to 38 per cent in 2009,” said Mr Fruth, who farms corn just outside of Holgate, Ohio.

US agricultural products continue to face a 15 per cent import tariff and Colombia’s price band system which imposes a variable charge on top of the regular import duty. Meanwhile, Argentina and Brazil continue to enjoy the advantages from the MERCOSUR agreement with Colombia, facing only a 6.9 per cent tariff.

“The tariff for MERCOSUR countries will be completely phased out by 2018. This will result in the United States being only a residual supplier to Colombia, at best. Ratification of the CTPA will eliminate both the import tariff and price band system, allowing a level playing field,” said Floyd Gaibler, USGC director of trade policy.

According to the American Farm Bureau Federation, a ratification of CTPA would result in US agricultural export gains of more than $815 million per year at full implementation.

“The ability of the US agricultural sector to remain competitive in the long-term will rely on our collective ability to supply the global markets with growing demand for feed and food products,” Mr Gaibler said. “That can only happen if the United States endorses the trade agreements we successfully negotiate and fully reengage in negotiating bilateral, regional and multi-lateral trade agreements around the world.”