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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
slide15

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
slide18

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

slide19

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)

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