Is Colombia Trade Deal Closer to Reality?

Roger Bernard, Farm Journal Policy & Washington Editor

The U.S.-Colombia Trade Promotion Agreement is edging closer to reality, with the Obama administration signaling they've worked out labor issue concerns. That sets the stage for the deal to head to the Hill for congressional approval. And that has ag interests in a host of commodities welcoming the package.

Under the plan, duties would end immediately on almost 70% of U.S. farm exports including wheat, barley, soybeans, soybean meal and flour, high-quality beef, bacon, almost all fruit and vegetable products, peanuts, whey, cotton, and the vast majority of processed products. Virtually all other remaining tariffs on U.S. farm exports would be ended within 15 years.

The U.S. exported $164 million of wheat and barley to Colombia in 2010 along with $103 million in soybeans/products, $100 million in cotton and $98 million of corn.

While wheat has been a key focus, the package would establish duty-free access through a 2.1-million metric ton (MMT) tariff-rate quota (TRQ) with 5% annual growth. Colombia will phase-out the out-of-quota tariff of 25 percent over 12 years.

The U.S. wheat industry has hailed the progress, with National Association of Wheat Growers President Wayne Hurst and U.S. Wheat Associates Chairman Don Schieber saying in a statement that the deal was needed for U.S. wheat growers to compete in the Colombia market. "Argentine wheat enjoys trade preferences under the Mercosur agreement," they said. "Canada and Colombia have ratified a separate FTA that will eliminate import tariffs on Canadian wheat and most other agricultural goods likely by July of this year. When that happens, the existing tariff and price band system applied to U.S. wheat imports will, in effect, make Canadian wheat significantly cheaper than U.S. wheat. As a result, Colombian millers who want to keep buying U.S. wheat would be forced buy more wheat from Canada because of the significant tariff disadvantage alone. The U.S.-Colombia FTA would remove that barrier."

Meanwhile, Panama has legislation pending that would address U.S. labor concerns in that country. Approval of that legislation in Panama could also set the stage for that deal to be wrapped up and sent to Congress for their approval.

If that does happen, it could mean all three trade deals negotiated some four years ago -- Panama, Colombia and South Korea -- could all gain congressional approval. The administration has been pushing for lawmakers to approve the Korean and now Colombian deals before July 1 with trade pacts between those countries and other non-U.S. trading partners take effect.

Here's a link to the cattle industry's reaction to the Colombia development.