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FTA with Colombia Approved; US Producers Lose Out

by 5m Editor
25 June 2010, at 10:11am

US - The Canadian Senate late Monday gave final approval to a free trade agreement (FTA) with Colombia, ensuring that exports of Canadian pork products and many other food and agricultural commodities will have immediate market-access advantage over US products in the Colombian market.

The United States and Colombia signed a free trade agreement on 22 November 2006 – now more than three and a half years ago. The Colombian Senate in 2007 voted to approve the agreement by a margin of 55-3 and the House by a margin of 85-10. The US Congress has not yet begun debate on the implementing legislation.

According to Iowa State University economist Dermot Hayes, the US-Colombia FTA, when fully implemented, would raise Live US hog prices $1.15 above what would otherwise be the case. With Canada’s action and with the failure of the US government to implement the US-Colombia FTA, trade benefits now will shift to Canadian pork producers. Hayes says that if the US does not implement its FTA with Colombia, the US will be completely out of the Colombian pork market within 10 years because of Canada’s FTA tariff advantage.

“It is unfortunate that our producers have to pay the price for US inaction on trade,“ said Sam Carney, president of the National Pork Producers Council and a pork producer from Adair, Iowa. “Canada will gain the inside track on future export opportunities in the sizeable and growing Colombian market."

“The sad truth is that the hardest market to gain access to is the one that is lost to competitors. Business relationships between Canada and Colombia will become established, and when that happens, our only hope will be if we can offer a more competitively priced product,“ Mr Carney said. “But that will be virtually impossible if Colombian tariffs on Canadian products remain lower than on ours for years to come.“

The US-Colombia FTA is one of three that are pending approval by Congress. Agreements with South Korea and Panama also have been awaiting action for more than three years. Panama also recently finalized an FTA with Canada, and South Korea is nearing completion on a deal with the European Union, so those markets are also in jeopardy of being lost to competitors. The US FTA with South Korea alone would add $10 to the price of each US hog sold, according to an analysis by Iowa State’s Dr Hayes.

NPPC has been calling for action on all three FTAs for years, pointing out the enormous risk of letting other countries move forward first. Now that the risk is becoming reality, it is critical that the US act quickly to at least keep its exports on a level playing field.