Colombia FTA Ratification Now Pertinent
Wisconsin Ag Connection, USA
Colombia FTA Ratification Now Pertinent
USAgNet
21 November 2008
U.S. corn growers could face a significant trade barrier in Colombia as a result of an increased import duty, imposed by the Colombian government this week, from a current 5 percent to 25 percent. Todd Drennan, U.S. agricultural attaché in Colombia, said the focus has turned away from why this decision was made and is now centered on the impact that may occur.
"We are not absolutely convinced there will be any major impacts due to a variety of reasons," said Drennan.
Specifically, he referenced an uncertainty of the amount of corn in intervention stocks. In addition, the 25 percent tariff only goes into effect when Colombia imports more than 2.3 million metric tons of corn (90.5 million bushels) and at zero duty prior to that point.
"Colombia’s real demand for corn is projected at 4 million tons (157.5 million bushels) but demand has dropped due to a weakening economy. Last year Colombia imported roughly 1.4 million tons (55 million bushels) of corn from the United States. I am also venturing to guess that between 500,000 tons (19.7 million bushels) and 1 million tons (39 million bushels) remain in stocks. But, then again, no one knows how much corn is in stocks,” he said. With all these factors in mind, we may never see imports go above 2.3 million tons (90.5 million bushels), thus keeping the tariff at zero duty."
Colombia, according to Drennan, is also likely to require 1 ton (39 bushels) of domestic corn to be purchased for every 4 tons (157.5 bushels) imported.
The country is currently the eighth-largest market for U.S. feed grains but a trade agreement would further intensify opportunities for U.S. farmers in the country, and lower food costs for Colombian consumers, according to Jaime Cuellar, U.S. Grains Council consultant in Colombia.
