FAS Fact Sheets Detail Benefits of U.S.-Colombia TPA for Agricultural Products
The Foreign Agriculture Service released two fact sheets detailing the benefits of the U.S.-Columbia Trade Promotion Agreement, which took effect May 15, 2012, for U.S. agricultural exporters. FAS said upon implementation of the Colombia TPA, almost 70 percent of current U.S. farm exports to Colombia will immediately become duty-free, and remaining tariffs will be eliminated within 15 years. Until now no U.S. agricultural exports have enjoyed duty-free access to Colombia.
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(According to FAS, most Colombian applied tariffs range from 5 percent to 20 percent for agricultural products. Moreover, there is no assurance that Colombia will not raise tariffs to its permitted World Trade Organization (WTO) limits (or tariff bindings), which range from 15% to 388%. FAS said that, under the agreement, Colombia will immediately eliminate duties on wheat, barley, soybeans, soybean meal and flour, high-quality beef, bacon, almost all fruit and vegetable products, wheat, peanuts, whey, cotton and the vast majority of processed products. The Colombia TPA also provides duty-free tariff rate quotas on standard beef, chicken leg quarters, dairy products, corn, sorghum, animal feeds, rice and soybean oil.)
TPA to Eliminate Colombian Price Band System
FAS said, under the Colombia TPA, Colombia will immediately eliminate its price band system, which affects more than 150 products, including corn, rice, wheat, oilseeds and products, dairy, pork, poultry, and sugar. Under the current price band system, the tariffs on these products vary with world prices and may reach up to Colombia’s WTO bound rates.
Agreement Provides for “Limited” Safeguards.
The Colombia TPA includes volume-based agricultural safeguards for a “limited” number of products covered by TRQs, said FAS. The safeguard triggers are set as a percentage of the growing TRQ quantities. Increased tariffs resulting from the triggering of a safeguard can only be maintained for the remainder of the year they are invoked. The availability of using an agricultural safeguard expires when the tariff for that product has been phased out.
FAS Said U.S. Exporters are Disadvantaged Without Implementation of TPA
FAS said the U.S. is already disadvantaged due to Columbia’s free trade agreements with third-countries, and the U.S. share of Colombia’s total agricultural imports fell from nearly 44 percent in 2007 to 21 percent in 2010. Should the U.S. not implement the CPTA, said FAS, further erosion of U.S. market share in Colombia is expected as that country’s existing and pending trade agreements with competitor countries take hold, leaving U.S. exporters in an increasingly disadvantaged position.
(According to the FAS, in 2010, Colombia finalized free trade agreements (FTAs) with Canada and the European Union, and is presently negotiating new FTAs with Panama and Korea. In addition, Colombia currently has FTAs in place with Chile, El Salvador, Guatemala, Honduras, Mexico, and Uruguay. It is also a member of the Andean Community Customs Union (Bolivia, Ecuador, and Peru) and is a party to the MERCOSUR-Andean Community agreement, under which it has implemented bilateral agreements with Brazil, Argentina, and Paraguay.)
Key Elements of Agreement Include Market Access, Elimination of Tariffs & TRQs, Etc.
FAS’ Fact Sheet said that key elements of the agreement include enhanced market access, tariff elimination, creation and annual expansion of tariff rate quotas (TRQs), the availability of safeguards, and the elimination of export subsidies. Specifically, FAS said benefits include:
Market access. FAS said no products are excluded from the Colombia TPA. According to FAS, the U.S. will receive equal or preferential treatment vis-à-vis third-party competitors on all key products under the agreement.
Tariff elimination. Under the Colombia TPA, tariff phase-outs range from immediate duty-free access to a maximum phase out of 19 years, said FAS. Tariffs on 77 percent of all agricultural tariff lines, accounting for more than 64 percent of current trade by value, will be eliminated when the Colombia TPA enters into force. Colombia will eliminate most other tariffs within 15 years, including many within the first 5 years, said FAS.
Tariff-rate quotas. According to the FAS’ fact sheet, for some products with longer tariff phase-outs, immediate duty-free market access will be provided through the creation and annual expansion of TRQs (providing duty-free access for a specified quantity of imports). Annual TRQ growth is on a compound basis for U.S. agricultural exports.
No export subsidies. The parties agreed not to use export subsidies on products shipped into each other’s market except to compete with third-party export subsidies, said FAS.
(See fact sheets for more details, including specific tariff treatment and TRQs for beef, pork, poultry, dairy, dry peas, beans, lentils, potatoes and products, fruits, juices, tree nuts, wheat and barley, corn, sorghum, animal feeds and fodders, rice, soybeans and soybean products, peanuts and peanut products, sugar and sweeteners, processed products, tobacco, and cotton.)
FAS fact sheet on benefits for specific agricultural products (dated 05/11/12) available here.
FAS fact sheet on entry into force of the agreement (dated 05/12/12) available here.
(See ITT’s Online Archives 12041630 for summary of announcement of May 15 effective date for U.S.-Colombia FTA.)