On Monday, Oct. 3, President Obama submitted the three pending trade agreements with Colombia, Korea and Panama to Congress for consideration. The House of Representatives quickly took action on the submission with the Ways and Means Committee holding a mark-up on the agreements and passing them from committee. The House and Senate are expected to vote on U.S. free trade agreements (FTAs) with Colombia, Panama, and South Korea on Wednesday, Oct. 12.
The three trade agreements will be part of a package that includes Trade Adjustment Assistance. The Ohio Farm Bureau, the American Soybean Association, the National Corn Growers Association, the National Pork Producers Council, the Ohio Corn and Wheat Growers Association and other groups support the Colombia, Korea and Panama trade agreements and Trade Adjustment Assistance and are encouraging members to call their Senators.
“The extreme value of the export market cannot be exaggerated,” said Tadd Nicholson, Ohio Corn and Wheat Growers Association interim CEO and director of government and industry affairs. “Each day this legislation is idle is an economic opportunity wasted for America and our farmers.”
The United States is the largest corn producer and exporter in the world. During the 2009-2010 marketing year, the U.S. exported 50.4 million metric tons of corn worldwide. The U.S. is also the world’s largest wheat exporter, with half of its production moving to export markets. In the 2010-2011 marketing year, the U.S. exported nearly 1.3 billion bushels of wheat valued at $10.3 billion.
The three trade agreements combined represent nearly $3 billion of additional agricultural exports. Nearly five years of inaction on these FTAs resulted in loss of U.S. market share and forfeiture of economic growth.
Korea: currently the U.S.’ third largest corn market and a potentially important market for distillers grains (ethanol byproduct used as animal feed); When the Korean FTA is passed, imports of U.S. corn for feed, as well as for distillers grains, are guaranteed to enter duty-free immediately
Colombia: Vital to the wheat industry’s efforts to maintain market share in what has traditionally been the largest market for U.S. wheat in South America; Without an agreement, U.S. wheat sales to Colombia have decreased 20 percent since June and U.S. wheat growers could lose at least $100 million in sales every year; Traditionally one of the top 10 export markets for U.S. corn, but is currently importing corn from U.S. competitors including Argentina and Brazil; In marketing year 2009-2010, U.S. corn exports to Colombia decreased dramatically, representing a loss of $475 million to the economy; With the passage of the Colombian FTA, U.S. corn producers would gain immediate access to the Colombian market for 2.1 million metric tons of corn at a 0 percent duty
Panama: one of the fastest-growing economies in Latin America; Grain tariffs into Panama can be as much as 90 percent, yet more than 99 percent of Panamanian exports into the U.S. enter duty-free; The Panamanian FTA will level the playing field between U.S. and Panamanian exports; U.S. wheat faces a 10 percent tariff compared to duty-free competitors
“The longer that preferential access is given to foreign countries, the longer they’ll receive a competitive edge — at a cost to the profitability of U.S. corn and wheat,” Nicholson said.
The development of new markets for American agricultural products will help offset the federal deficit to propel the nation for economic growth and international competitiveness.