The free trade agreement between Canada and Colombia became official last week. Most agricultural products from Canada will now enter Colombia duty free. U.S. products are still subject to a base tariff of 10% as the wait continues for the pending free trade agreement between the U.S. and Colombia to be sent to Congress and passed.
According to U.S. Wheat Associates Director of Communications Steve Mercer, the U.S. does have a small advantage in shipping costs to Colombia, but that 10% tariff basically cancels out that advantage.
"Colombian millers have told us that they want to continue buying U.S. wheat," Mercer said. "But that difference is going to make them think twice about it."
The U.S. has already been losing market share in Colombia and Mercer says that in wheat alone we could potentially lose sales of $100 million a year. The same is true for other U.S. agricultural products, and that lost share is not going to immediately return.
"It is going to take a while once we do get the free trade agreement, and we are competing on the basis of quality and not some artificial trade barrier," Mercer said. "At one point we sold Colombia 70% of its wheat needs, and that has gone down to below 50% over the last couple of years. It will go down we think potentially to 30%."
Mercer says it is especially frustrating that Canada negotiated their free trade agreement two year after the U.S. negotiated its free trade agreement with Colombia. He says the trade agreement that was negotiated in 2006 needs to be passed.
"Indications are that the Administration intends to submit the agreements to Congress once everyone is back in session," Mercer said. "With luck and no more political maneuverings hopefully that will happen in September."
There has been a lot of pointed fingers as to who is to blame for the delay of FTA passage. President Obama said during his Midwest tour last week that Congress could pass them now, although he hasn't sent them to Congress. All indications are that Congress is ready to approve the FTAs as soon as the Administration sends them to Capitol Hill.
U.S. Trade Representative Ron Kirk says a vote on Trade Adjustment Assistance is expected before Congress considers the free trade agreements with South Korea, Panama and Colombia.