Free Trade Agreements took center stage in the Commodities Pavilion at the Illinois State Fair today, as Illinois farm leaders gathered to explain their importance. Illinois Corn Growers Association President Jim Reed, from Monticello, focused on Colombia and its potential for corn farmers.
Three pending trade agreements have been caught up in the Congressional quagmire. Despite the dogged efforts of members of the Illinois Congressional delegation, the Korean, Panamanian, and Colombian FTA’s remained unsigned.
With regard to Colombia, Reed made the following points:
- Colombia is the number one easiest place to do business in Latin America & Caribbean region, according to the World Bank (2010)
- In 2002 Colombia had 2 FTAs with 5 countries. Now Colombia has or is negotiating 13 Free Trade Agreements, allowing 49 countries duty free access to the prosperous Colombian market.
- China has a six-fold increase in its share of the Colombian market in the last 10 years, becoming Colombia’s second largest trading partner. At the current pace, China will displace the U.S. as Colombia’s main trading partner in less than a decade.
- Colombia is a $4.3 billion agricultural market (value of total imports in 2010). Before losing market share in the past two years, Colombia was the 15th largest market for U.S. agricultural products in the World and the 8th largest for U.S. corn, wheat and soybeans.
- The U.S. farmers used to be the main suppliers of agricultural goods in Colombia with a peak of 47% of market share in 2008.
- However, in 2010 the U.S. market share has fallen to 21%, and for the first time the U.S. lost its preeminence in the Colombian market.
- Colombia consumes about 5 million tons of corn every year. 70% is imported.
- U.S. exports of corn and products to Colombia declined 63% in 2009, and 33% in 2010
- American farmers unnecessarily pay tariffs ranging from 5% to 40% plus a “price band” tariff to sell in the Colombian market (it cost U.S. exporters at least $234 millions in tariffs in 2008).
- According to the USITC (2006), the Colombian U.S. FTA will increase U.S. corn exports to Colombia 24%, or about $70 million. The FTA will provide immediate duty free access to 2.1 million tons of yellow corn and will fully open the market in 12 years.
- Due to the FTA, model results suggest that overall U.S. agricultural exports to Colombia will increase by 44 percent, or $370 million per year.
Corn: “With the removal of the tariff, annual U.S. corn exports to Colombia would likely increase 24 percent, or about $70 million”.
Soybean meal: “The full implementation of the CTPA would likely more than double U.S. exports of oilseed products and make them more competitive with Argentina’s exports.”
Beef: “It is likely that U.S. exports of beef to Colombia will rise by more than 80 percent after the elimination of tariffs in the CTPA.’
Pork and Poultry: “Currently, U.S. pork and poultry meat faces an average MFN tariff of nearly 20 percent in Colombia. The elimination of tariffs on U.S. exports would likely increase U.S. exports of these products by more than 60 percent.”
Dairy: “The MFN tariff faced by U.S. dairy product exports to Colombia currently averages about 18 percent. The scheduled elimination of these tariffs is estimated to increase U.S. exports by an additional 50 percent.”
Pictured: ICGA President Jim Reed talks about the Colombian Free Trade Agreement with MIke Adams on the AgriTalk radio program from the Illinois State Fair today.