Transcript USW Revised PowerPoint Template 1
North Dakota Wheat Commission State Meeting
December 2010
Trade Policy Overview
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WTO / Doha
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Free Trade Agreements
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Irritants
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Priorities
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Reliability
153 Members – International rules of trade
World Trade Organization
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Showing signs of progress
– Is 2011 the window to conclude ???
– 2012 is US election and farm bill – 2013 is EU agricultural reform – Small Group Meetings at Ambassador level – US bilateral discussions •
Timeline guidance for 2011
– Draft Text 1 st Quarter, Final Text 2 nd Quarter – Scheduling text and sign 4 th quarter
World Trade Organization
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Agriculture negotiations
– Market Access • Special safeguard and sensitive products • More assurance on market access for trade off in supports – Elimination of export subsidies • No longer being used by most countries; makes it permanent – Disciplines on State Trading Enterprises • Trade distorting behavior – Domestic support caps reduced • Current negotiated levels look alright; • Revenue assurance programs
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World Trade Organization
Disciplines to eliminate trade distortion
– Eliminate all forms of export subsidies – Eliminate government financing & preferential access to capital or other special privileges through government guarantees – Eliminate government underwriting of losses – Other WTO members allowed to request information on exports, volume, price and destination – Annual notifications on operations
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World Trade Organization
Benefits – Past WTO agreement
– Farm gate price and exports increased
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Free Trade Agreements
Colombia
– Canada ratified in June 2010 – Colombia’s Constitutional Court expected to ratify last section of Canadian agreement in December 2010 – Implementation likely in first half of 2011 – U.S. signed in 2006 – labor issues – Pushing for tariff elimination via other channels
Panama
– Tax Information Exchange Agreement signed. Labor issues being worked out • 90% market share
Free Trade Agreements
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Korea
– Negotiations continue – priority for administration • Mainly autos, but other issues remain as sticking points • Top 10 US customer - small duty on wheat to be eliminated – Ratification will be a strong signal to the entire world • Especially for Doha, TPP, and other pending FTAs – EU signed agreement on October 6 – expects all approvals and implementation July 2011 • Australia finished 5 th round of talks in May 2010 • Canada negotiating
Free Trade Agreements - TPP
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TransPacific Partnership
– Malaysia has joined the 8 other countries • US, Peru, Chile, N. Zealand, Australia, Singapore, Vietnam, Brunei – Interest to be a larger agreement (Asian Pacific Economic Cooperation – APEC): • Japan, Canada, Thailand, Taiwan, Philippines, S. Korea, and others – Talks continue this week
Free Trade Agreements
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Morocco
– 2010 was a better year for filling TRQs – Common wheat TRQ mostly filled – 300,000 MT from total of 330,000 MT for 2010 – Durum TRQ unfilled • No sales on roughly 290,000 MT durum quota for 2010 • Quota increases 10,000 metric tons each year and duty is phased to zero – Currently no preference as no duties in place on durum or common wheat
Brazil
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WTO Case
Brazil - WTO Case
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Joint communication signed between U.S. and Brazil – avoided 30% tariffs
– Not a mutually agreed solution – Parameters for discussion on domestic support of cotton and reviews of the GSM-102 program – Consultations to be held at least four times per year – After enactment of the new farm bill, the U.S. and Brazil will consult to determine whether a mutually agreed solution has been reached
Brazil – WTO Case – Why Wheat?
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GSM-102 Program
– Annual allocations announced in two equal installments (beginning and mid FY) – reviewed – Adjustments in fees and tenors • Over $1.3 billion – increase fees by 11% • Over $1.5 billion – increase fees by 15% • <$800 million – decrease fees by 50% of last increase • 16 month maximum average tenor – Wheat is a major user of GSM • $693 million in 2008/09 of $5.3 billion • $524 million in 2009/10 of $3.1 billion
Brazil – WTO Case – Why Wheat
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U.S. Wheat Associates Efforts
– Wheat was major commodity on retaliation list – Duties to increase to 30% • Increased price of over $40 per metric ton (>$1/bu) – Conducted meetings with ministries making decisions on new tariffs and with industry to remove wheat from the list • Made economic argument on volatility in supplies from Argentina, Paraguay and Uruguay – Joined Brazil-US Business Council • Cooperate with cross section of industry *Exports over 400 TMT in 2010 to date
Trade Irritants
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Mexico Trucking
– Retaliation to ending the trucking program in 2009 – Carrousel duties could impact wheat – # of products increased to 99 (54 agriculture) – $2.5 billion in products (68% agriculture) •
Algeria Reference Price on Durum
– Impacts private durum imports – loyal customers
Other Priorities
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Cuba
– Continue to push for normalized trade – Travel ban and payments – HR 4645 •
Monitoring and Enforcement
– Domestic subsidy spending, etc.
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Flour Exports from Turkey
– Lost market share in S. Asia
U.S. Reliability
“No Tax or Duty shall be laid on Articles exported from any State.”
U.S. Constitution, Article I, Section 9, Clause 5
Agricultural Embargoes and Contract Sanctity Food Security Act of 1985:
Declares U.S. policy to
encourage agricultural exports
and not to restrict exports
except under the most compelling circumstances
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The Food, Agriculture, Conservation, and Trade Act of 1990: Contracts
to export agricultural commodities, which were
agreed upon before any prohibition, should not be abrogated
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Export Administration Act of 1999: Prohibition
on agricultural exports can only be imposed when the
President declares a national emergency
. (high prices do not qualify)