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North Dakota Wheat Commission State Meeting. December 2010. Trade Policy Overview. WTO / Doha Free Trade Agreements Irritants Priorities Reliability. 153 Members – International rules of trade. World Trade Organization. Showing signs of progress Is 2011 the window to conclude ???

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Trade policy overview
Trade Policy Overview

  • WTO / Doha

  • Free Trade Agreements

  • Irritants

  • Priorities

  • Reliability



World trade organization
World Trade Organization

  • 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 1st Quarter, Final Text 2nd Quarter

    • Scheduling text and sign 4th quarter


World trade organization1
World Trade Organization

  • 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


World trade organization2
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


World trade organization3
World Trade Organization

  • Benefits – Past WTO agreement

    • Farm gate price and exports increased


Free trade agreements
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 agreements1
Free Trade Agreements

  • 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 5th round of talks in May 2010

      • Canada negotiating


Free trade agreements tpp
Free Trade Agreements - TPP

  • 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 agreements2
Free Trade Agreements

  • 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
Brazil

  • WTO Case


Brazil wto case
Brazil - WTO Case

  • 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
Brazil – WTO Case – Why Wheat?

  • 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

  • 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
Trade Irritants

  • 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
Other Priorities

  • Cuba

    • Continue to push for normalized trade

    • Travel ban and payments

    • HR 4645

  • Monitoring and Enforcement

    • Domestic subsidy spending, etc.

  • 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.

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.

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)


Questions www uswheat org

Questions www.uswheat.org


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