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North Dakota Wheat Commission State Meeting

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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North Dakota Wheat Commission State Meeting

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  1. North Dakota Wheat Commission State Meeting December 2010

  2. Trade Policy Overview • WTO / Doha • Free Trade Agreements • Irritants • Priorities • Reliability

  3. 153 Members – International rules of trade

  4. 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

  5. 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

  6. 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

  7. World Trade Organization • Benefits – Past WTO agreement • Farm gate price and exports increased

  8. 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

  9. 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

  10. 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

  11. 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

  12. Brazil • WTO Case

  13. 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

  14. 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

  15. 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

  16. 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

  17. 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

  18. 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

  19. 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)

  20. Questions www.uswheat.org

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